Financing vs Leasing a Car
Getting a new car can be a big investment, so it is important to be well-informed on which option will best suit your lifestyle. Leasing and financing are both great car finance options, but come with individual pros and cons. Here we go through the differences between leasing a car vs financing a car.
How Does Financing a Car Work?
Financing a car involves paying a monthly fee, and after a set length of time you own the car. It is a good option for those who want to own their own car but do not have enough funds to pay the total upfront cost.
The two most common types of car finance are Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements. HP refers to renting with the intention of owning the car after the final payment. PCP involves an initial down payment, followed by fixed monthly payments, and then a final balloon payment if you want to keep the vehicle.

There are more responsibilities involved with car ownership than leasing. Financing often comes with the manufacturer’s warranty, but you will be required to pay for the car’s maintenance and road tax. Unless you have a 0% APR deal, financing also comes with interest rates.
Your mileage will normally be limited while paying off the vehicle, but once you own the car, there are no restrictions. You will also have to handle selling the car when you replace it.
How Does Leasing a Car Work?
Leasing a car involves renting a car for a set amount of time, after which you hand back the keys. At no point will you own the car, but leasing is a more affordable and practical option than buying a car. It helps you keep up with the newest car models. You won’t have to worry about extra payments, selling, or depreciation.
Most lease contracts last between 2-5 years. You’ll be required to make an upfront payment, and then monthly payments, both of which tend to be cheaper than their financing equivalents. Your monthly fee includes annual road tax, manufacturer’s warranty, and you can add on a maintenance package for servicing and general wear and tear. There are also no interest rates when leasing, meaning you can expect consistent payments covering most of the car’s associated costs.
Leasing can often give you flexible payment options for the newest cars on the market and the choice of specifications and colours. The short contract also allows you to get a new car every few years without having to worry about selling your current car.
The drawbacks of leasing are that you will not own the car, and there are mileage caps, which may be restrictive. It can also be hard to lease if you have a poor credit score. Furthermore, while you can normally end your lease early, this can involve expensive fees.
To learn more about the automotive procurement options Apertus Group offer, email info@apertusgroup.co.uk, or call 01604 212 828.