Do You Really Need To Own A Car?

Blog post   •   Nov 10, 2010 15:03 GMT

There is a dominant desire for ownership within the British psyche. In a country where we rely on such a substantial amount of technology it seems our consumption and ownership patterns are directed by the standard and generally accepted way of living.

One of the broadest examples of this in the UK is that we often feel the need to own something, so that we can say it’s ours. Houses, for instance, are more commonly thought of objects which you should purchase (albeit via a mortgage), rather than rent. However, this is very different to countries in Europe where renting a property is more common than ownership.

And exactly the same thing can be said about car ownership.

When you go to buy your car, it’s highly likely that in terms of financing the purchase, you don’t consider anything else other than either paying for it by cash or by way of some form of loan, whether it’s from a bank or through hire purchase via a car dealership. However, for many people in the UKcar leasing, could be the way forward for them. The most basic and straightforward explanation of a car lease is that you pay monthly to drive a car (owned by a leasing company) for a predetermined length of time. You pay a set fee every month and operate it within the car lease agreement terms and conditions. The most notable conditions are the amount of miles that you cover (a figure which is agreed at the beginning and can be around the 10,000 miles per annum) and the company’s wear and tear policy.

On first looking at car leasing and considering the core reasons for owning a car (ie; driving from A to B), it can appear that it’s not widely different to more traditional car ownership – and to a certain extent, it’s not.

Why then, can a car lease be better than actually buying a car? When people buy a new car, they tend to own it for around 5 years, trading it in for a newer model after this length of time. Although your car may have been worth, for example, 15,000 pounds when you purchased it, by the time the 5 years is up, it will have fallen in value dramatically and you’d be looking at an average part exchange price of around 5,000 pounds if you are lucky.  This means that you’d either have to pay out more of your own money for the newer car or take out a new car finance agreement.

With a car lease, however, you’ll never have to worry about a car falling in value, as after the 2, 3 or 4 year lease agreement is up, you can simply send it back and receive a brand new car. Other advantages of a car lease over owning a vehicle is that the monthly cost of finance can be as much as 50% cheaper, you will avoid the repair and maintenance costs of the car as it gets older because most lease cars are 3 – 4 years old for consumers or 2 – 3 years old for businesses. Car leasing isn’t for everyone and it may not be for you.  However, it’s strongly advised that next time you go looking for a car, you consider car leasing, as it could save you a substantial amount of money and be a much more suitable option for your circumstances.