Car Leasing Vs Car Financing - Which Is Better?

Home Leasing Guides Car Leasing Vs Car Financing - Which Is Better?
Car Leasing Vs Car Financing - Which Is Better?
There are so many ways one can get their hands on a car nowadays and it can be quite overwhelming when you’re bombarded with the different roads to take - pun intended. 

When researching the best ways to grab a good deal, two words will often pop up: Leasing and Financing. There is often confusion around these two, so in this guide, we’re going to explain what they are, their differences, and what road you should be taking depending on what you want. So what is the difference between leasing and financing a car?


What is Car Leasing?

To put it simply, leasing a vehicle is the process of paying a sum of money to rent the vehicle for an agreed amount of time. There are key features within the leasing process that are important to remember if you believe that leasing is the right option for you. Read our full guide on What is Car Leasing to fully understand the leasing process.

Car Owners

Reasons to Lease a Car 

There are many benefits to leasing a car that often goes unheard. Many people are off-put by leasing due to the sometimes confusing jargon and apparently complicated process. But once you hear about the pros of leasing, it’s likely you’ll be wondering why you haven’t done it already!

You may already be aware that leasing a car means that you do not own it. That statement alone can be enough to put someone off. “Why would I want to drive a car I don’t even own?” I hear you ask. Well, the answer is simple. Because you don’t own the car, you’re able to get a new car every two to four years, this can either be the same as before or you can mix it up a bit! Not only that but by leasing, your monthly payments are often 30% to 60% lower than if you were buying a car.

Also, by choosing to lease over other methods, you’ll be able to personalise the leasing process to best suit your needs. This includes the duration of the lease, the amount you want to pay for the initial payment, and the mileage of the vehicle. 


What is Car Financing?

Because getting yourself a car is a big commitment and a one-off payment can often leave a nasty dent in your bank account, a lot of people prefer to pay for a car over an agreed amount of time via a finance scheme. There are multiple types of finance plans and understanding the process of each can be tricky. The following are the main types and a little bit about what they offer:

car driver

Personal Lease

Although different from the other financing processes, leasing is a type of finance. Unlike others, the driver of the vehicle does not own the car for the entire process. However, in some other financial leasing agreements, you can own the car after the agreement. To understand other leasing contracts, take a look at our contract guides.

Hire Purchase (HP)

With Hire Purchase, you typically pay a 10% deposit and repay the money due (as well as the interest added) over a period of time. You do not own the car until the end of the loan, then the car is yours!

Personal Contract Purchase (PCP)

This process is best suited to people who regularly change their vehicles. Similar to that of leasing, PCP involves paying a sum of money, followed by monthly installments over a period of time. In the end, a lump sum can be paid, meaning you’d own the car outright, or you can sell the car in order to pay off the remainder or you can return the vehicle.


Reasons to Finance a Car

Unlike leasing, other car financing methods are a consideration for those who believe owning the car is essential. It’s also worth noting that, unlike leasing, your mileage is unlimited. Lastly, customers typically finance their cars up to 6 years which may (or may not) be to your preference depending on how long you’re wanting the car.


The decision to either lease a car or to use alternative methods is entirely up to the customer, you. Ask yourself what you want.

Is driving a completely new car more important than owning one outright?

Is your mileage consistent each year or are you unable to predict your future journeys?

Would simply returning a vehicle be better than the process of selling it yourself?



Hopefully, this guide has helped answer the question of 'What is the difference between leasing and financing?'. Here at All Car Leasing, we guarantee a hassle-free leasing process. We believe that leasing is the correct option for those looking to get their hands on a shiny new car with low monthly payments and no extra costs. If this guide has tilted you over to the leasing process, then feel free to browse our latest special offers and see if anything tickles your fancy. 


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