Buying a car is one of the most significant expenses anyone can incur. Although some people choose to pay for the car upfront (in full), many often choose the long way – where one opts for a car loan. Whether buying a new or a used car, servicing a car loan can be daunting and a lengthy process. For this reason, many choose to lease a vehicle instead. This is because renting a car is considerably more affordable with no need to take an auto loan for the same. You can use a leased car to run virtually any errand you would with your car. While leasing a car is considerably cheaper, it is not the best option for everyone.
Below are some of the advantages, and disadvantages, of leasing a car over buying one.
- Significantly lower monthly payments when compared to servicing a loan
- Ability to drive your choice car in each lease period
- Warranty protection
- No need to worry about vehicle depreciation or selling the car
Most car lease payments are considerably lower (60% less) than financing an auto loan according to intelligentcarleasing.com. You also don’t have to worry about comprehensive coverage once the warranty period expires. The leasing company takes care of insurance and other costs related to owning a car. You also don’t have to worry about tax or emission compliance with the vehicle. Best put, you get to avoid all the costs and taxes involved in owning a car when you lease one.
- You need a predictable/stable source of income to lease a car
- There are mileage restrictions involved
- You have to take extra care of the car
- One must purchase gap insurance
- It’s an expensive option in the long run
You need a stable source of income to lease a vehicle. Losing your salary while on a leased vehicle can take a toll on your credit score and finances. Another reason many people avoid hiring a car is that getting out of contract attracts penalties that can be expensive. This is unlike owning a car whereby you can resolve to sell it. You also have to sign a ton of agreements when leasing a car. Some of the terms on these contracts are too restrictive and binding.
Benefits of buying a car
- The privilege of owning a car
- No mileage restrictions (go wherever you can)
- You have the freedom to customize the car as you like
- Can trade the car for another one, or sell it altogether
- Spread the cost by driving the vehicle all its lifetime
- No risk of contract penalties or lease end charges
One of the reasons many people opt to buy a car instead of leasing is the ability to do anything with their cars. You have the freedom to travel as far as you can without attracting additional fees. In addition to this, you can let your mechanic customize the car to meet your needs and standards. One thing about owning a car is a sense of responsibility. A responsible car owner will do anything just to keep the vehicle in top condition and running for that matter. It’s by being a responsible car owner and driver that you get to have enough cover at much lower premiums.
- High monthly loan repayments
- Unexpected repair costs on warranty expiration
- You are responsible for trading or selling a used car
Car Insurance – A critical factor for car owners and lessee
Car insurance is an essential factor to consider when shopping for a car, or leasing one. Although you may already know this, car leasing company only buy enough insurance to cover the car and the driver alone. This means you, the lessee, will have to purchase gap insurance to take care of the rest. Should you opt to buy a new car, you will be required to purchase the state’s minimum liability coverage. Finding affordable cover for your car is however much easier and more accessible. All you need to do is show around for a reputable insurance provider.
Short Vs. Long-term Use
Buying a vehicle is far more beneficial for most people today. It is particularly important if one intends to use the car for the long-term. Leasing a vehicle for the short-term on the other hand is advantageous. You get to spend less while using the car. Several other considerations should be made to make the best choice at the end of the day.