Is it better to buy or lease a used car?

Approved by the Car Finance Advisory Board

The benefit of buying a used car is that you would own the car outright from the moment you purchased it and completed the V5C document. There would be no monthly payments, but the negative side to buying would be that you would need to save a lot of money in order to purchase the vehicle.

Leasing a used car has several benefits. This enables you to spread the cost of the car over a period of time, for example 48 or 60 months. You'll also be able to get a new car every few years if you wish to do so, or make a balloon payment if you wanted to take ownership of the vehicle. Leasing a used car in this way is called a Hire Purchase. Leasing a used car is also usually easier than getting a bank loan, particularly if your credit rating isn’t very good. People also find that individual payments can be more manageable and cheaper in the long run than buying a car outright or repaying a loan. Leasing a used car can also enable you to buy a more expensive car as the payments can be spread over a longer period of time, for example over 60 months instead of 24. Finally, with a lease, the dealer is the one who accepts the depreciation, since they will take back the leased car. If you buy the car outright, and want to sell it after, for example, 3 years, the loss due to depreciation will unfortunately be out of your own pocket. If you would like further information on how car leasing works, please visit our dedicated help section.

Published: 16/05/2016
Last Updated:31/01/2019
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