One of the common questions that most car buyers are faced with is whether to buy or lease a car. While purchasing a car is a fairly straightforward process, leasing is a little different.
The basic idea behind leasing a car is using a car for a fixed duration at an agreed amount of money. Once this term is over, the car has to be returned to the leasing company or the car owner. Owing to the popularity of leasing, it is quickly becoming a reliable alternative to purchasing a car.
The decision of leasing a car relies on personal tastes and priorities. While many businesses may lease luxury cars to drive clients at a lower cost than the price of the car, some people choose to lease because they prefer driving a brand new car every few years.
While leasing may appear appealing owing to its benefits, it has a number of disadvantages. Let’s take a look at these in details.
Pros of Leasing a Car
1. Reduced Expenses
Leasing a car is less expensive than purchasing it. Contrary to purchasing a car, leasing does not require a large down payment. Therefore, compared to financing a loan for a new car, leasing is far cheaper. This is because, when you are leasing a car, you are paying only a portion of the car’s full value over the lease period. Therefore, you can get a brand new car at a price that is far less than its actual cost.
2. Hassle-Free Usage of a Car
Purchasing a car involves a series of hassles. However, in the case of leasing a car, you do not have to deal with any negotiation or go through piles of paperwork to seal the deal. You do not have to worry about any extra hassle.
As soon as the lease ends, all you need to do is, ensure that the car is in the agreed-upon condition and hand over the keys to the owner. You do not have to put in the extra effort to find a suitable buyer for the car or negotiate the trade-in value. However, if you wish to buy the car after the lease ends, you already know the value you need to pay.
3. Own a New Car Every Few Years
Leasing a car involves signing a contract determining the duration for which you will be using the car. If you sign a contract for 2 years, it means that you get to lease another new car after 24 months. This means that you get the latest features, a brand new warranty and a free maintenance all over again with a new car.
The good news is you can drive a new car every year or two at far less the cost.
Cons of Leasing a Car
1. No Ownership
To put it simply, when you are leasing a car, you are actually renting it. This means the leasing company or the owner retains the ownership of the car and you only pay for usage and maintenance of the car.
When you lease a car, you will not be able to make any permanent modifications to personalise it. If you live in the UK, you can install private registration plates of the UK in your new leased car.
2. Extra Payment for Wear and Tear
A car leasing contract states that you will not be able to drive it beyond the annual mileage restriction that you have agreed upon. If your leased car undergoes excess wear and tear than the normal amount, you will be required to pay a penalty for the same. This includes wear and tear on the tyres, brakes, scratches on the body of the car and so on.
3. No Scope of Early Termination
The contracts for leasing cars in written in ways that prevent early termination. However, if you wish to terminate a contract early, you would be required to pay a penalty. The earlier you terminate the lease, the higher will be the penalty. Therefore, it becomes quite expensive to get out of a lease.
Leasing a car has its own set of advantages as well as disadvantages. Therefore, it is crucial to understand these in order to avoid any car leasing mistakes and take an informed decision.