Car buying is the process of a buyer approaching commercial lenders to finance a car ownership. The customer banks a deposit and monthly payments to secure ownership. The loan value is based on the cost of the vehicle and is repaid by the monthly payments. Before the payments are made the car however typically belongs to the lender.
On the other hand, car leasing involves the buyer approaching car rental provides for a car of their choice with no help from banks. Unlike car buying, car leasing payments only cover the cost of the depreciation during the lease period plus a fee. With a car rental, the buyer is only expected to pay the difference in cost between a car’s current cost and the cost at the end of the lease period. Buyers, however, have to agree to lease terms that contain rules for maintenance among others that the purchaser is expected to respect.
Because car buying means paying back the entire cost of the car, monthly payments are higher than the monthly payments of car leasing. Although after finishing the payments the car is yours, car buying restricts the car ownership choices of buyers to their financial strength. Customers interested car rental services, therefore, have a broad range of vehicles to choose from compared to if they wanted car buying.
However, if an individual has the objective of staying with the car for long, car leasing has restrictions as there is the need for constant renewal after the expiry of the stipulated time frame which is often not more than three years. There is also no mileage constraints, and an individual can drive to places of their choice without violating the sale agreement terms. Most lease agreements impose fines on the distance over the maximum.
Benefits of car leasing over purchasing
Low cost compared to buying
Unlike in car buying where the down payment is usually high, car rental often offers buyers no down payment at all or petite in rare occasions. This allows customers to access cars of their choice. Buyers can choose that expensive SUV they have always wanted to own, or they can choose that car with excellent reliability and fuel efficiency.
Variety of cars to choose from
After a lease period for a particular car, brand has expired, buyers have a choice of leasing new car models. Therefore, the buyers can always be driving late model vehicles with the latest high-tech and safety features while still covered by the manufacturer’s warranty.
Quality of cars is assured
Buyers also have an opportunity of driving their cars when they are still new. This gives the customers a chance to own the cars for a time when they are relatively trouble free and take them back to their leasers after completion of the lease term. This improves the car ownership and driving experience. Car Leasing also helps one predict the total cost of the property and also gives the buyer an opportunity to experience many driving cars before eventually making a choice to buy one.
Recent statistics show that most buyers have started embracing the idea of car leasing with almost a third of all cars on roads being sourced from car leasing providers. This statistics not only demonstrate a shift in buyers’ mindsets but also show car rental’s appealing nature. Therefore, car leasing is necessary not only to customers who will find the cost of financing a new car expensive but it is also recommendable to any potential car buyer who prefers to experience the unique benefits that come with it.