Car Leasing vs. Hire Purchase

Car Leasing vs. Hire Purchase

Blog / Car Leasing vs. Hire Purchase


As you are considering your options for your first or next car purchase, in your mind you may be toggling between different types of finance plan to suit both your driving needs and your financial circumstances. Two of the plans which stand out for customers are car leasing and hire purchase, and though they are sometimes confused as being interchangeable, this is simply not the case. In this article, we will remind you of what each plan involves, and then attempt to determine which may be best for you.

Car Finance Specialists

Car leasing is a topic that we covered in a recent article, so we will simply reiterate here that it involves your workplace being leased a vehicle from a third party provider for you to use. It means that the company incurs the monthly payment costs, though it also means that the motor is used solely for business, and after the agreement ends, the car will be leased to another party, meaning that the company – and you as an employee – would have to look elsewhere. But it does ensure that the organisation handles the payments, which so long as you as an employee follow the protocol means that you have less pressure to find the funds for a vehicle that you are planning to use simply for work commutes. However, car leasing is not the preserve of companies. Recently, personal leasing have become more popular with recent statistics showing over 1 million people lease cars in the UK for a period of between 2-5 years.

As for a hire purchase, this is a more personal option since it will be you and not your employer handling the monthly payments and the initial deposit. This basically means that you are officially hiring the car as opposed to buying it, meaning that it does not belong to you in the event of the agreement stalling for any reason while active. This makes it easier for drivers to walk away at the end of the deal, since they do not have to sell the vehicle as it doesn’t belong to them in the first place, though it does mean that the motorist is unable to make any potential money from a sale or a part exchange. That being said, the driver does have the opportunity to purchase the car at the end of the plan, at which point they would become the owner; otherwise, the deal expires and they move on with the need to find a new motor. If you are wondering the difference between this (car leasing) and PCP, please keep an eye on our next article comparing the two. In a nutshell, unlike PCP, there’s no interest charge on your payments, you’re simply just paying the depreciation on the car.

Hire Purchase Deals

In terms of which option is best, it ultimately depends on what you are planning to use the car for. If work travels are only part of your driving plans, then the hire purchase is highly recommended, since there are no limitations provided in the agreement. If it is designed solely for business usage, though, then perhaps car leasing is the way to go, assuming of course that your employer approves and has the funds in place to be able to cover your travels (bear in mind, though, that if you ever left the company or were away from work for an extended period, the car would remain with the organisation). It is something to carefully consider, because the pros and cons could go a long way not only towards deciding what car you end up with, but also how much value you truly gain from the vehicle in the long run. One of the main benefits of having a lease car is that various elements of car ‘ownership’ are brought together for the customer in one simple package. For example, Warranties, road tax, breakdown cover are all under one contract giving you less worry when you have to utilise any of the above services.

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So, these are just some of the reasons why we are considered a leading car finance specialist, but you can learn more by contacting our vehicle financing team here or if you just want to browse our stock page first, feel free. For an instant No Obligation quoteApply today or Call us on 01925 230360.

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