The Most Cost Effective Way to Have a Car

car financeIf you’re like most people used to driving, then the prospect of not having a car would be akin to the feeling a child has when they are sent to their bedroom and grounded – cars offer us freedom and huge convenience, yet they are also considerably expensive to run and own. Your vehicle can make up a large part of your household finances, so this article looks at the three most common ways of having a car; leasing, renting and owning – in order to work out which is the most cost effective option for you.

OWNING

This might seem like the most sensible choice, as at the end of the day, whilst buying a car outright – whether in cash, or on finance, is a significant expense, it is at least an ‘asset’ you own yourself. However, a car is a depreciating asset that loses its value each mile you drive and each day that passes by – it’s not like a house which appreciates in value. If you are to buy a brand new car, then as soon as you drive off the forecourt, the financial hit you can expect in terms of depreciation is in four figures!

Buying a second-hand car, particularly one that is just a few months old, seems to be one of the smartest moves you can make if purchasing a car… however, even then, the cost of insurance, road tax, MOT, servicing, maintenance and repairs can mount up to the point any ownership of a car will take its toll on your finances. This is where the less popular option of renting a car can pay dividends.

RENTING

It might seem a strange idea to rent a car, as an alternative to owning one, but if you don’t always use a car (e.g. you live in Central London or travel a lot for work) then hiring a car could prove to be the most financially beneficial to your situation. This way, you are only paying for the car when you actually need it (there’s nothing more annoying than paying for a 24 month lease, when you’re out the country for a few months, and the car is sitting in your driveway)… but more than anything, the insurance is included. When you consider how much insurance costs – renting a car that comes with fully comprehensive insurance can actually end up saving you money, particularly for inexperienced drivers or those without no claims bonus.

LEASING

The middle ground between owning a car and renting one is to look into long-term leasing; indeed, you may wish to visit intelligentcarleasing.com in order to consider your options and see what deals are available – as you can find some incredible offers particularly at this time of year. The great thing with leasing is that you aren’t always responsible for maintaining the car in terms of servicing, and if something goes wrong with the car, you can simply go back to the leasing company and they’ll replace the vehicle. Leasing offers a hassle-free option but the downside is you never end up owning the car, so a bit like renting a property – you’re not building any equity in an asset, however, with a car… it’s a depreciating asset anyway, so this shouldn’t be too offputting.

In summary, there are three main options to consider in terms of having a vehicle; and the right option for you will be heavily dependent on your individual circumstances.

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