Generally, cars are either leased or bought. Leases essentially equate to a lessee, in this case the driver, renting a car from the lessor, the dealership, for a set number of months in which the car can travel another set number of miles. While it is true the lessee does not own the car, it is also true lessees have a limited amount of responsibility with respect to repairs and maintenance.
Most cars are bought, in which total ownership is transferred to whoever forked money over. Owners have complete responsibility for repairs, maintenance, and disposing, keeping, or selling the vehicle.
Listed are the some of the most important aspects of leases prospective car shoppers should consider when deciding to lease or buy a car.
Car Leases are Significantly Cheaper
Vehicular leases are far less expensive than outright buying cars because lessees are expected to return the vehicle to the lessor at lease end. Lessees pay how much depreciation they put on the car during its lease term plus interest. Owners pay the entire cost of the vehicle.
For example, let’s consider a car worth $20,000. A lessee takes out a lease for one year. During that year, the car is expected to depreciate to $17,000. The lessee would pay monthly installments towards the $3,000 difference plus interest. Conversely, an owner would pay the entire $20,000. The lessee is paying to use the car right now. The owner is paying to have complete control over the car for an indefinite period of time.
Down payments for financing the purchase of cars usually total several months’ worth of installments. Down payments for car leases, usually called security deposits, are usually no larger than one month’s worth of installments. The security deposits lessees are responsible for are a fraction of the cost of hefty down payments car buyers must submit.
Lessees Need Not Deal with the Hassles of Reselling Used Cars
Because lessees are expected to return the leased vehicle at the end of lease term, lessees do not deal with reselling their now-used cars. Vehicle owners, as their name implies, retain ownership over their vehicles. Most often, owners do not wish to keep vehicles indefinitely and end up selling them at some point.
Used car marketplaces online and in local or regional print circulations are not friendly to sellers, the car owners. Potential customers often lowball or extensively haggle prices down to unreasonable amounts. Owners must create more exposure around their used vehicle in order to have a reasonable chance of earning a reasonable sum in return.
The process of reselling used cars is often long and is always difficult and stressful. Lessees need not worry about recovering the significant sums used to gain ownership of a vehicle, as vehicular lease costs are far less than car purchase prices.
Lessees Have Fewer Responsibilities to Repair and Maintain
When anything breaks, messes up, or begins to function less than optimally, lessees return their vehicle to its dealership. Leased vehicle repair is covered by either the dealership or manufacturer warranty, as all leased cars have at least one active warranty.
Car owners must repair and maintain cars themselves or they will inevitably face a break down. Many car owners do not perform maintenance often, albeit some level of upkeep. Such sparsely conducted maintenance will surely result in the depreciation of the car’s value.
Overall, lessees have fewer responsibilities than car owners do. Lessees also pay less money than owners for essentially the same access to vehicles. Lessees can even take tax breaks on their leased cars if used for business purposes.
The benefits car leasing provides to lessees is undoubtedly much higher than the high costs and responsibilities related to ownership provides to owners.