Buying a car is an expensive affair and many factors effect this decision. While some people simply purchase the cars, leasing a car is another form of car financing trend prevailing in the market. If you are thinking whether to buy or lease a car, check out the below mentioned information to understand the major differences between leasing and buying the new and old cars.
Understanding car leasing
Car leasing is similar to renting an apartment. Each month you are required to make a payment which grants you the permission of driving the car. Unlike apartment renting, there is a defined time for how long you are granted to use of the car. After that duration, you will have to return the vehicle.
There are many financial advantages to car leasing. In most cases, the lease payment will be lesser than car price, because after the lease period you need to return the car. Leasing comes with strict requirements. Lease agreements permit for normal wear and tear, but if any major scrapes or damage is caused to the vehicle, you will be liable for the repairs.
Lease a car Vs. Buy a car
Ownership: When you buy a car, you can keep it lifetime with you. Car leasing does not provide you the ownership of the car. You will have to return the car after specified time period.
Up-front Cost: When you purchase a car, you will have to pay cash price or down payment, registration cost, taxes and other fees. The up-front cost of leasing the popular cars includes first month’s payment, refundable security amount, registration fees and taxes. In short, up-front cost of leasing is much less than buying.
Monthly installments: Loan installments are usually higher than lease payments.
Vehicle return: You can trade or sell your purchased vehicle whenever you want. On the other hand, you are not allowed to trade or sell the leased vehicle. Plus, you will have to return the leased vehicle to its original owner after a certain time period.
Leasing and purchasing both have benefits and drawbacks that you are required to consider in order to understand which option is right for you.