Car Leasing or Buying ? Which better ?

Is the rental better than the purchase?

Choosing whether to rent a new vehicle instead of buying it largely comes down to priorities. For some drivers, rental or purchase is purely a question of dollars and hundred. For others, it is more about forming an emotional link with the car. Before choosing the road to follow, it is important to understand the main distinctions.

Buy against a car rental

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When you rent a vehicle, you mainly rent it from the dealer for a certain period. It is generally 36 or 48 months. Once your rental period is completed, you have the possibility of returning the vehicle to the dealer or buying it in a predetermined amount, which is defined in the rental contract.

It is very different from the purchase of a car. Buying it downright means you have it once the loan is paid.

Rental payments

Rental payments are generally lower than the monthly payments of loans for a new vehicle.

The monthly car loan payments are calculated according to the sale price, the interest rate and the number of months it will take to reimburse the loan.

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Rental payments depend on factors, in particular:

  • Sale price: this is negotiated with the dealer, as with a vehicle purchase.
  • Length of the lease: This is the number of months you agree to rent the car.
  • Expected mileage: the lease establishes a maximum number of miles, you can drive the car each year. Most leases are delivered with an annual allocation of 12,000 miles. Monthly payment will increase slightly if you opt for a higher annual mileage. If you exceed the mileage limit in the contract, you need to the money dealer for each additional mile at the end of the lease.
  • Residual value: this is the value of the vehicle at the end of the lease, with its representing depreciation. If you decide to buy the vehicle once the lease is expired, this is the amount you will pay.
  • Rent fees: these costs are represented as a dollar figure rather than a percentage, but it is equivalent to costs of interest.
  • Taxes and costs: these are added to the lease and affect the monthly cost.

Some dealers or manufacturers they represent require a payment for a lease. The more you lower, the lower your payment.

Keep in mind that it may not be logical to put too much money on a vehicle that you finally give to the dealer. If you are sure you are going to buy it at the end of the lease, it will then reduce the cost.

Advantages and disadvantages of the rental

The major disadvantage of the rental is that you would not acquire any capital in the vehicle. It’s a bit like renting an apartment. You make monthly payments, but you have no property request to the property once the lease is expired.

In this case, this means that you cannot sell the car or exchange it to reduce the cost of your next vehicle.

However, there are also rental advantages. They understand:

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Lower monthly payments

A lease slightly facilitates the burden if you are concerned with the monthly costs of obtaining a car. Generally, monthly payment is considerably lower than it would be for a car loan. Some people even opt for a more luxurious car than they could allow it otherwise.

Make sure your insurance covers the costs that can always be due even if the car is totalized before the lease exhausts.

A new car every few years

For many people, there is nothing like the feeling of leaving in a whole new walk. If you are one of them, rental can be the way to follow. When the lease is increasing in a few years, you can return it and get your next new car.

Carefree interview

Many new cars offer a warranty that lasts at least three years. So when you put a three -year lease, most repairs should be covered. The rental arrangements largely eliminate the dangers of a significant unexpected expenditure.

No resale concerns

Are you the kind of person who hates merchant? If this is the case, you probably hate the idea of ​​selling your used car to a dealer or a private buyer. With a lease, you simply return the car. The only thing you need to worry about is to pay off rental fees.