Is leasing or financing better if I want to change cars often?

Leasing might be better for those who want to switch cars every few years, as it offers shorter contract terms and the ability to drive a new vehicle more regularly.

Is leasing cheaper than financing a car?

Leasing usually has lower monthly payments, but you don’t own the car at the end. Financing may cost more monthly but could be cheaper long-term if you plan to keep the car and want to build equity.

What is the difference between leasing and financing a car?

The main difference is ownership. Leasing (PCH) is like long-term rental where you return the car at the end, while financing (HP or PCP) involves buying the car over time and potentially owning it at the end of the agreement.

Does leasing affect my credit differently than financing?

Both leasing and financing require credit checks and appear on your credit report. Making payments on time with either option could help improve your credit score, while missed payments could harm it.

What are the disadvantages of leasing a car?

You won’t own the car, and leasing comes with mileage limits and potential fees for wear and tear. Exceeding mileage or damaging the car can lead to additional charges.

Compare Hire Purchase vs. Leasing

Choosing between hire purchase and leasing? While we don’t currently offer leasing, that doesn’t mean it couldn’t be right for you. Here’s what you need to think about: Do you want to own the car? At the end of your HP car finance agreement, you’ll own your car, but with leasing, you never will! If changing car regularly is more important to you than owning a car, leasing might be a good fit for you. Do restrictions apply? Leasing can come with terms and conditions including restrictions on how far you can drive and what condition you need to keep the car in. If you drive long distances and want to own the vehicle at the end of the agreement, a hire purchase agreement (with no mileage restrictions) could suit you better. If neither hire purchase nor leasing sounds quite right, there is a middle ground. Find out more about lease purchase – also known as hire purchase with balloon – over on our blog.

Is car leasing or car finance a better option?

Written by Joe Achillies Updated 26 Jun 2025

Get your no obligation car finance quote

Topics covered

Is car leasing or car finance a better option?

Trying to figure out whether to lease or finance a car can be confusing. Both options have their benefits, but the right choice depends on your budget, whether you like to switch cars often, and whether you want to own the car eventually.

To help you make an informed decision, we’ve broken down the difference between leasing and financing and the pros and cons of both to weigh up.

What’s the difference between leasing and financing a car?

There are a few differences between leasing and financing a car. But the biggest difference is who owns the car at the end of the loan term.

With leasing, you’re essentially renting a car for a few years. Leasing is also known as Personal Contract Hire (PCH). You make monthly payments that cover the car’s depreciation (how much value it loses while you’re using it) plus some interest. When your lease is up, you hand the car back.

When you finance a car, you take out a loan to buy the car. Your monthly payments go towards paying off the loan and interest. Once you’ve paid it off, the car is yours to keep, sell, or trade in, depending on the type of finance you choose. Financing usually comes in two main types:

Hire Purchase (HP): You may or may not pay a deposit and then make fixed monthly payments. Once you’ve made all the payments, the car is yours.
Personal Contract Purchase (PCP): You typically pay lower monthly payments compared to HP because you’re mostly covering the car’s depreciation. At the end of the term, you have options: hand the car back, pay a final lump sum (often called a balloon payment) to own it, or trade it in for a new deal.

It’s important to understand car finance vs leasing to work out which is best for you. Remember, there is no right and wrong; just what you want out of the agreement.

Should I lease or finance my next car.jpg

Leasing versus financing a car

Both leasing and financing have their pros and cons to consider carefully. Here’s a simple look at them to help you figure out which might suit you better.

Leasing pros and cons

Leasing pros

Lower monthly payments: Since you’re only paying for how much the car's value drops while you’re using it, your payments are usually lower than if you financed the same car. However, monthly payments can vary based on the car model, length of the lease and your own financial situation.
Switch more often: If you like swapping your car every few years, leasing might be better for you.
Less maintenance hassle: Leases are usually short enough to keep you covered under the manufacturer’s warranty, which could save you money on repairs.
Easy end point: When your lease is up, you just return the car, and there’s no need to worry about selling it on if that feels like a hassle to you.

Leasing cons

You won’t own the car: One big downside is that you’re paying for a car you’ll never own, so you’re not building any equity.
Mileage limits: Most leases have strict mileage limits, and if you go over these, you’ll have to pay a fee.
Wear and tear changes: You have to be very careful with a leased car or you might get hit with charges for wear and tear when you hand it back.

Financing pros and cons

Financing pros

You could own the car: In a HP deal, you’ll own the car at the end of your agreement. In a PCP deal, you own the car if you decide to pay the optional balloon payment. If you choose not to pay the balloon payment, you will need to return the car.
Mileage flexibility: HP Finance agreements can allow for more mileage options, as there are no mileage restrictions. In contrast, you may find that PCP or leasing often have limits and penalties for going over.
Resale value: Once you own the car, you could sell it and get some of your money back.

Financing cons

Higher monthly payments: Car finance agreements often have higher monthly payments compared to leasing.
Depreciation: When you finance a car, its value decreases over time due to depreciation. This means that when you try to sell or trade the car, you'll likely receive less money than you originally paid for it.
Long-term commitment: Financing a car typically involves a longer-term commitment, whereas leasing can offer shorter contracts. Some people are put off by this.

Only you can decide if the benefits of car leasing outweigh the cons for you; it comes down to your priorities and finances. Just remember to factor in your short and long-term goals before entering into any agreement.

We recommend seeking independent financial advice if you're unsure about which option suits your personal financial situation.

Is vehicle leasing worth it?

Leasing can be worth it for some people. If you get bored easily and like to switch up your car, leasing might be worth it because the loan terms are typically shorter, so you’ll be able to change cars more regularly. It’s also usually cheaper month to month, so it can be worth it financially in the short term.

But, if you want to own the car at the end and build some equity, you may find a better option with HP or PCP.

Is it better to lease or finance a car?

So, is vehicle leasing worth it, or would finance be better for you? Let’s get down to the nuts and bolts. In essence:

Leasing is better if:

You want lower monthly payments
You want to switch your car more regularly
You don’t mind not owning the vehicle
You can drive within agreed mileage limits and look after the car

Financing is better if:

You’re planning to keep the car long term
You want the option to own or sell the car at the end
You want to build personal equity over time
You’re happy to stick to mileage and condition terms (PCP only)

The takeaway

Like everything, there are pros and cons to leasing and car finance. The choice ultimately comes down to your lifestyle and budget. Leasing could be a good option if you enjoy driving new cars, but it comes with mileage limits and you won't own the car at the end.

On the flip side, financing costs more upfront but gives you the benefit of ownership at the end, and may even save you money in the long run.

By carefully weighing up the benefits of car leasing versus the downsides, you can make the choice that’s right for you. If you decide car finance is the right option for you, we’re here to help you find the best deal for your circumstances. Get an obligation-free quote now or give us a call!

Disclaimer: It's important to consider all terms and conditions before entering into any agreement. Monthly payments and the total cost of financing or leasing can vary depending on factors like credit history, vehicle model, and length of the agreement. Ensure you fully understand any additional costs, such as early termination fees, excess mileage charges, and maintenance costs before making a decision.