Leasing vs Buying

  • Many people still think purchasing a vehicle outright is the best option, but that might not always be the case.



  • Leasing has grown in popularity over the past few years and can offer you the chance of driving a brand new car for a lot less money. So, what are the main differences?

    If you are currently looking for a new car, you may not have considered leasing it.


Personal loans and hire purchase are the most popular funding methods for purchasing vehicles outright.

Personal Loans

A personal loan is an unsecured loan, enabling you to finance a new vehicle. It gives you instant ownership of the car; however, if you miss a payment, the loan provider may be able to seize your assets.

Hire purchase

This involves paying an up-front deposit, typically between 10-50% of the value of the vehicle, then fixed monthly payments, until the full value has been paid off. You do not legally own the vehicle until the final payment has been made. With both hire purchase and personal loans you will, take ownership of the vehicle.

What about maintaining the vehicle?

Throughout the life of a personal loan or hire purchase agreement, you will be responsible for maintaining, repairing and servicing the vehicle. You won’t need to MOT a new vehicle for the first three years, but will be required to service it regularly (the manufacturer’s manual should recommend the frequency of servicing).

Many new vehicles come with a warranty, but the length and level of coverage will vary by manufacturer. Any maintenance issues that fall outside of this warranty will have to be paid for by you. You will also have to pay vehicle insurance and car tax (if the vehicle emits over 100g/km of CO2).

What happens when I sell the vehicle?

When you sell or upgrade your vehicle, you will be responsible for its re-sale and accounting for any depreciation. Any money made from resale will be yours, but the risk associated with depreciation will also sit with you. This means any wear and tear, high mileage or loss of documents, including service receipts, may impact the vehicle’s resale value.

  • Buying benefits:

    • You immediately own the vehicle, so any money made from resale is yours
    • You don’t have to commit to an agreed annual mileage limit
    • Monthly payments will eventually stop when the car has been paid for
    • You are free to modify the vehicle as you please
    • You won’t be charged for wear and tear on the vehicle (although this could impact the resale value)


  • The most popular funding methods for leasing vehicles are contract hire and contract purchase, both of which are available to business and personal lease customers.

  • With both options, you’ll pay an initial fee, generally equal to between three-six monthly payments, followed by fixed monthly sums, which are often lower than if you chose a personal loan or hire purchase agreement.

Contract Hire

With a contract hire agreement, you choose a vehicle to fit your budget, agree a lease term (usually between two-four years) and set an annual mileage limit. You’ll pay an initial fee (generally equal to three-six monthly payments), followed by fixed, monthly payments. The vehicle is yours to drive, but you won’t own it, so you won’t have to worry about depreciation or selling it on, as we’ll sort this.

If you decide to add a maintenance package (at an extra cost, built into your monthly payments) you won’t have to worry about budgeting for servicing, unexpected repairs or breakdown assistance, At the end of the agreement, you hand the vehicle back and, if you decide to renew your lease, pick a new one.

Contract purchase

With a contract purchase agreement, you’ll also pick a suitable vehicle, agree a lease term and set an annual mileage limit.

You’ll be required to pay an upfront fee (often equal to three-six monthly payments), then fixed monthly payments.

At the end of the agreement, you can hand the vehicle back, upgrade to a newer model, or take ownership of the vehicle, by paying a final balloon payment.

What happens when my lease period ends?

If opting for a contract hire agreement, you’ll hand the vehicle back when your lease period is up. If you decide to renew your lease, you can pick a new vehicle. We’ll take care of selling it on and the risk associated with depreciation lies with us.

If you choose a contract purchase agreement, you may hand the vehicle back, renew your agreement for a newer vehicle or, alternatively, you can take ownership of the vehicle, with a final balloon payment. From that point on-wards, the vehicle is yours, so you will be responsible for re-sale and the risks associated with depreciation will also lie with you.

What about Maintaining the vehicle?

You can add a maintenance package, which will cover day-to-day maintenance, servicing, repairs and breakdown assistance for the duration of your lease agreement.

Vehicle tax is also generally included. You will, however, be responsible for insuring the vehicle, unless your agreement is taken out as part of a company scheme, in which case your employer may provide insurance.

*For an additional fee.

  • Leasing benefits:

    • Option to drive a new vehicle every two-four years, without any large up-front payments
    • Monthly payments are generally less costly than repayments on a personal car loan or hire purchase agreement
    • Easy to budget, with fixed, monthly payments
    • Add a maintenance package*, so you don’t have to worry about budgeting for servicing, repairs and breakdown cover. Road tax is also usually included
    • No need to worry about depreciation
    • Hassle-free selling; we’ll do it for you
    • When your contract ends, renew your lease agreement and trade your vehicle in for a brand new one
    • With contract purchase, you have the flexibility to take ownership of your vehicle once the agreement ends

Speak to an expert

If you would like more find out more about how we can help you. Please fill in the below form and a Hitachi Capital representative will be in touch.

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Hitachi Capital Vehicle Solutions is a brand of Hitachi Capital (UK) PLC - (HCUK). Other brands under which we trade include Hitachi Personal Finance, Hitachi Capital Business Finance and Hitachi Capital Invoice Finance.

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