Leasing vs. Buying vs. Subscription - What Is the Best Way to Own a Car?

Buying vs leasing a new car is the age-old question facing consumers looking to upgrade their wheels. You are faced with a ton of potential vehicles, models, and add-ons, making the process more complicated for potential consumers. 

Sky-rocketing prices for fuel have also added to the equation, with electric or hybrid cars seemingly the beacon of light toward a brighter and better future – but this also comes at a cost, with average prices for electric cars rising by 4.4% in the USA last year.

So for many, leasing is the preferred option, given the drastic deprecating of a new car's price over the first few years. In fact, nearly 1 in 5 new cars on the road in the USA are currently being leased, which is a massive market share.

To make matters somewhat more confusing, car subscriptions are well and truly on the rise, and they provide a huge depth of bonus features that make getting your hands on a new car easier than ever – but more on that later.

Leasing a car is much like a long-term rental. You'll have to make an upfront payment, plus monthly payments, and get to use a car for several years. 

At the end of the lease, you'll have to return the vehicle and have to decide if you want to start a new lease or purchase the car.

The average lease payment for a new vehicle is $467 per month, according to Experian. That’s over $100 less than the average monthly auto loan payment for a new car, which is approx. $568.

The monthly cost of leasing a car is less than buying it outright because it is essentially renting it for a set amount of time, usually around 36 months, though there are options for different loan lengths.

Others may choose to finance the entire cost of a car, paying it off in monthly chunks. Sometimes you get the option to purchase the car at the end of your lease, which can offer a pretty good deal for a customer.

Since most new cars come with at least three years of bumper-to-bumper warranty coverage, leasing a car should be hassle-free and rarely result in unexpected costs. When it's time to relocate, there's no need to haggle with private sellers or list the vehicle on your own.

One of the biggest financial decisions a customer will make is whether to buy a new car. Figuring out payments, upkeep, and resale value before visiting a dealership will help you avoid making an impulsive or emotional decision.

The real problem with buying a car outright in today's market is the rapid decline in the overall value of the car once a few miles have been put on the clock. 

The first year is when cars lose the most value, and depreciation lasts for around five years. A car's value can drop by up to 20% in the first year and by about 40% from the initial cost over the first five years. That’s a whopping 15% of the value of the car lost annually.

Don’t be put off by this. There are some major perks to buying a new car, for example, you’re free to do whatever you desire with it, whether it be customization or adding after-market features.

You can also benefit from financing, with dealers needing to hit certain sales quotas, you can often find some pretty decent deals if you shop around.

There is now a new way to get your hands on the latest vehicles on the market without all the potential hassle of leasing or the worries of buying. A subscription model.

The main benefit of a subscription service over traditional leasing agreements is flexibility, but there are other factors as well.

Subscription services work on a rolling contract, with the option to cancel or change your vehicle at the end of your contract. That’s handy if your circumstances are likely to change – for instance if you’re thinking of starting a family or working abroad for a while.

For many, the advantages of a subscription may be the possibility of keeping up-to-date with the latest cars and tech, much like people do with phones (just on a larger scale). 

Whilst this may seem attractive, most subscriptions tend to prefer 6-24 month contracts, not just chopping and changing whenever you get bored of your current car.

Here at FINN, we have tried to make the process of securing a new car as simple as possible.

Simply select the car you like from our ever-growing fleet, and let us do some basic affordability checks (these have no impact on your credit score), then once approved, receive your car with a free delivery to your doorstep!

You also benefit from FINN’s included comprehensive insurance and maintenance, so you can drive care-free (but still carefully!). 

Currently, we offer 6-24 month car subscriptions, so you can get the best out of your ride. You also don’t have to worry about large down payments or hidden fees along the way.

A car subscription is ideally suited for those who would prefer to make one payment a month for their car, as everything is included in the monthly cost. It is also perfect for people who want to have access to newer car models and technology, as you aren’t tied in for 3 to 5 years.

It really is a new way to drive, but like with leasing and buying, it might not be for everyone, and you should always consider the financial implications of all the various methods before committing.

Leasing is more likely to have additional costs along the way, which you should be aware of. Although there are certain leasing agreements that are more complete than others, you will often need to arrange your own insurance as well as your servicing. 

All of these are typically included in subscription services' base prices, but it's still wise to double-check as some do charge extra for insurance.

It is important to note that the average monthly cost is likely to be more with a subscription, but this includes any additional extras you’d usually have to cover when leasing. 

If you can’t afford to buy a car outright, or you simply don’t want to, then there are some very attractive financing deals out there. But if you ever struggle to make payments, the car will be taken back, so you need to have a good regular income.

Overall, each method of getting a new car has its perks, depending on personal preference and affordability. It’s important to shop around for the best deal before committing long-term.