| The question of whether car leasing is better than car | | | | need to be answered based on your 'wants' (with |
| buying seems to generate significant and animated | | | | question 6 being the biggest 'want' or 'need' of all): |
| debate. The two camps and their armies of | | | | 5. Do you want to drive the best car that you can |
| supporters have some zealots that consider it | | | | afford? By afford we mean the monthly payment on |
| sacrilegious to think of the alternative. The truth is, that | | | | finance comfortably fits within your monthly budget |
| like anything the answer to "what is best?" depends on | | | | without causing stress. If yes, leasing can often get |
| the car shopper's needs and wants. Once these are | | | | you an 'up market' car (eg; Audi, Mini, BMW, Mercedes) |
| determined, then he/she can apply some basic maths | | | | for 30% of the price of buying a car on a loan. |
| to determine whether or not buying or leasing is best. | | | | 6. What car do you want or need to drive? |
| The criteria you can use to decide which car finance is | | | | Now that you have answered the above, the following |
| best can be answered using the following decision | | | | is a rough and simple mathematical calculation that can |
| tree. NB-For this to work, you must truthfully answer | | | | tell you the benefit of leasing the car that you want or |
| each question based on the true definition of 'need' and | | | | need versus buying a car. What is critical to this is how |
| 'want': | | | | much the car that you want to drive is likely to |
| 1. Do you need unlimited mileage? If yes, proceed no | | | | depreciate across the period that you want to drive or |
| further and buy a car. | | | | own the car. If we assume 3 years then you need to: |
| 2. Do you need to own the car from the 1st day you | | | | (i) Obtain the likely future value of the car after 3 |
| drive it? If no, then go to the next question. | | | | years (you can get this from the a AA website which |
| 3. Do you need to obtain finance to obtain the car? If | | | | states on average most cars depreciate 60% over 3 |
| no, proceed no further and buy a car with cash. | | | | years); |
| 4. Do you need a fixed monthly payment for finance | | | | (ii) Deduct the future value from the current retail price |
| that will not vary across a fixed period (3 - 5 years)? If | | | | to obtain the 'depreciation amount'; |
| yes then proceed to the next question. | | | | (iii) Take the depreciation amount and use a car |
| If you have got through the above questions, then | | | | finance calculator and add 8.9% APR to get total |
| leasing is an option that could work out cheaper than | | | | lease payment then, divide this by 36 months to get |
| buying. However, there are a few more questions that | | | | the rough monthly payment for that car if you leased it. |