Leasing vs Owning a vehicle

February 10, 2014

leasing a carThere’s a major difference between leasing and owning your own vehicle. Leasing is when you make payments of the vehicle over a certain period of time, while the other option is to pay the whole price upfront and get the car transferred to your name. However, both have their advantages and disadvantages. So, how do you decide which one is the better option? Here are a few important things to compare before you make the decision:

Leasing A Car

Leasing is a great option for people who are salaried and get a fixed income every month. Because such people aren’t able to save a great deal of money in the long run, and hence paying upfront is a difficult thing. When you purchase a car on lease, a certain amount of interest also has to be paid. However, certain other features, such as a tracker and comprehensive insurance are all included in your monthly payment. When you purchase a car on a lease, you often have to show the lessor your employment records, as well as the duration of your job and monthly income. Then, the lessor will carry out a risk analysis to determine your repayability, and decide the interest rates. Depending upon the duration of the lease, these terms and conditions might vary. The down payment also plays a major role. If you are purchasing a car after making a larger down payment, the remaining monthly payments will obviously be considerably less as the amount of interest will be reduced significantly. However, if the down payment is less and the payback period is also longer, the monthly payment will definitely be at its maximum. Throughout the duration of the lease, the car will be owned by the bank. The official papers will only be transferred to your name after the lease period is complete. Leasing is a good option for people who like to change cars after a few years.

Owning a Vehicle

Owning a vehicle is a much simpler concept. You just have to make an upfront payment and the dealership/ company transfers the car to your name. Then, you can opt for insurance coverage as well as other options such as a tracker or servicing packages. Owning a vehicle obviously includes much less hassle, but it requires you to make an upfront payment at once, something that not all people are capable of doing in these economic times.