Should you rent, lease or own your car?

4 min | 20 May 2024

The Chase team

If driving is an essential expense for you, how can you make sure that your car fits your needs – and your budget?

We share the stories of drivers who have traded their cars for public transport or personal contract purchase (PCP (Opens in new window)) leases. We also look at why some may still opt to own.

Renting or subscription: pay as you go

'People who live in cities and use public transport might only use their cars a couple of times a month,' says motoring journalist Graham Scott. 'So they’re carrying a lot of cost that could be better spent elsewhere.'

This was the case for Dan Anthony, a university lecturer who lives near Cardiff and works in Bristol. When his old car wasn’t exempt from Bristol’s Clean Air Zone charge, he decided not to upgrade but to do away with car ownership altogether.

Instead, he now takes public transport and taxis for his daily needs. And for longer journeys, he hires a car.

Dan estimates that his yearly costs were around £360 for insurance, £500 for maintenance and road tax and £2,160 (or £180 a month) for fuel. If he had kept his old car, he was also set to spend about £1,000 a year on ULEZ charges – a yearly total of around £4,020 for all of his running costs.

'Even factoring in fares,' he says, 'I reckon I’m about £100 to £150 better off a month.'

'Of course, some days cost more than others, but I’m also enjoying not having the responsibility of car ownership.'

Leasing: regular monthly payments

'I receive a company car allowance, so a PCP deal enabled me to buy a brand new car that was highly fuel-efficient and covered by warranty,' says Owen Richardson, an IT director from Somerset.

'Financing the whole cost of the car would have put it beyond my reach.'

PCP leases offer the option of buying your car for its guaranteed minimum future value at the end of your lease, which may offer a more affordable avenue towards car ownership for some drivers. It’s important to consider excess mileage and damage charges with PCP finance, as any mileage over your agreed limit or damage to your car over normal wear and tear can mean fees if you skip the final balloon payment. This will be laid out in your contract. Also, if you choose to skip that final balloon payment, you won't end up owning the car.

With a personal contract hire (PCH (Opens in new window)) lease, you simply return the car at the end of your lease. For drivers who want a new car every few years, this can offer a degree of flexibility.

Whether you finance your lease through PCH or PCP, it will usually involve an initial non-refundable deposit, then regular monthly payments calculated on the value of the car and your estimated monthly mileage.

Additionally, car tax, maintenance and insurance may or may not be included, so you’ll want to factor those in alongside your usual running costs.

Owning: outright purchase and additional costs

'If you own your car, you can change it when you like or sell it to realise its value,' says Graham.

When you own your car, you’re also responsible for its maintenance, insurance and fuel costs.

At the same time, it’s entirely yours – you don’t have to worry about incurring extra fees if your puppy scratches the door or you decide to spray-paint it pink.

'For some people,' Graham notes, 'ownership brings a feeling of financial security despite the cost of depreciation.'

Depreciation, or the decrease in your car’s value over time, can be seen as a hidden cost of car ownership. A new car can depreciate by 15-35% in its first year and by 50% or more after three years.

Yet owning your car doesn’t have to mean purchasing the newest model with the most premium trim. Buying a pre-owned car can avoid some of the costs of depreciation, as well as offering a more affordable option for ownership.

Preparing to change gears

Your everyday life may always require a car, but considering your options could help you find a more cost-effective approach.

Whatever you decide to do, look after your money. Chase's easy-access saver account lets you start saving with as little as you like.

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