Leasing a car is not renting a car. It is like buying a car with a loan, thus becomes another financing option but can be in a different way. Leasing a car is suitable for those who want the car for a limited period whereas buying a car is owned by the person who buys the car.
Comparison of leasing and buying of car
The following panel helps you understand the difference between leasing and buying a car:
|Monthly payments are not made according to the vehicle’s purchase price but to the depreciating price of the vehicle.||Monthly payments are made according to the vehicle’s purchase price.|
|When leasing, down payment is not often required.||Buying requires down payment to be done.|
|After the completion of lease period, there is a need of another vehicle to be leased.||On completion of car loan, the vehicle is owned by you.|
|You need to keep a check about the miles you drive per year.||There are no restrictions for the mileage.|
|You have to face penalties if any wear and tear on the exterior or interior of the vehicle is found.||No such payments are required as the payment is made with the intention of owning the vehicle, which helps you keep the vehicle in good condition.|
|Payment of lease amount is always as the payment is made towards vehicle’s depreciating value.||As you are paying for the vehicle’s purchase price, amount of installments is usually high.|
|Leasing of car includes initial payment, security deposit that is refundable, taxes, registration fee and other fees if any.||Buying of a car include costs like down payment, registration, taxes and other fees if any.|
|The vehicle is not owned by you. You can only use it but have to be returned by the end of the lease contract.||Under this procedure, the vehicle is owned by you and can be kept as long as you desire.|
|If you want to end the lease contract early, you are required to pay for it. This will be almost equal to the amount for the entire contract period.||At any time, the vehicle can be sold and the money that comes from the sale of the vehicle can be utilized to pay off the loan balance if any.|
|As the lessor requires the vehicle in the same condition as it was at the time of sale, you can’t make any modifications to the vehicle. If any, it requires you to remove it before returning the car.||As you own the vehicle, you can modify or can add any excess parts to the vehicle. The choice is ultimately yours.|
Each procedure has its own advantages and disadvantages, choose one that will be appropriate for you according to your need and budget.