If you are thinking of getting a new car, then you are probably wondering if you should buy one or lease. The buying process is straightforward; you just pay for the car loan until the car is fully yours. Car leasing, while not a traditional option has become popular today. However, some people are still going for car loans and hire purchase to get their dream car, a culture that only backed by lack of information. If people knew the benefits of car leasing, maybe they would think twice before burdening themselves with car loans.
How car leasing works
Before we get to the benefits of car leasing, let us understand how it works first. When leasing a car, you could take two contracts. One is the personal contract hire (PCH), and the other is personal contract purchase (PCP). When leasing a car, you rent it for a specific period and pay a specific monthly payment as agreed.
With a PCH contract, you get the car for the specified term then take it back when you are done. With a PCP, however, you take the car back once the term is over, but you are welcome to buy the car if you liked it.
Specific benefits of leasing a car
Have you ever dreamed of driving a car but it was too expensive, and you couldn’t afford it? Well, most of us have been there. However, driving your dream car can be made possible through car leasing. When you buy a car, you have to pay the whole amount on its price tag. This is a comparatively costlier way of acquiring your dream car. When leasing, however, you will only be required to pay for the time you use the car. Therefore, you can drive any car you want at a low cost. The cost of leasing a car is so low that you can get a car that you wouldn’t afford otherwise.
And guess what, you can get another car at the end of the term. This is a fantastic deal. Not only are you able to drive your dream car, but you can also get the latest model whenever they are available. When you buy a car, you pay for it until it is fully yours. That makes you the owner and you are stuck with it unless you decide to sell it at a lower price or trade it in. Leasing doesn’t come with such a hassle. Once the term is done, you take back the old car and ask for the latest model, or just walk away; no questions asked.
You get low monthly payments. Since you aren’t looking to keep the car, you only pay for using the car per month. This lowers your monthly payments to about 30-60% of the same monthly payments you would make if you decided to take a loan for the car. This is awesome considering that cars depreciate at a high rate.
Lower repair and maintenance costs: Since you don’t fully own the car, the repair and maintenance are taken care of by the leasing firm’s insurance company. You only pay a subtle amount when it comes to car repairs. The rest of the cost will be covered by the insurance company. The car manufacturer warranty also takes care of some of the maintenance costs.
You get a break on some taxes: When you lease a car, road tax is usually included in the lease. So all those costs are taken care of. After you buy a car, you have to pay tax for the full value of your new car. With leasing, the cost is lower because the car is not fully yours. Tax is only paid for the value of the car you use every month. The tax payments are also distributed across the monthly payments that you make unlike in buying a car when you have to pay the full amount at once.
Sometimes the contract doesn’t require a deposit or down payment. This lowers the price of getting the new car. You can get the car and start paying the fees as you drive the car. Also, if you lease the car for business purposes, you get tax deductibles. The IRS understands that you are using the leased car for business and not luxury and can set the taxes even lower than for a bought car.
We believe that if more people were aware of these and other benefits of car leasing, they would lease more cars than they buy. This is because leasing a car can be a helpful and cheaper way to get a car even when your finances aren’t very good. When you start leasing a car, you may never stop doing it after enjoying its convenience.