Financing vs. leasing a car is a choice that every individual who wishes to own a car has to make. However, there are many factors that determine what will be better for each person. The lifestyle and usage of car is the most important element to help you understand what should you opt for. Yet, there are multiple other pros and cons. Let us understand exactly when is car leasing better than financing.
One of the most favourable instances of when car leasing is better than financing is that you’re going to save extra money. Firstly, there is no down payment involved and you do not have to pay a lot in terms of taxes and other charges as well. Thereafter, even the monthly payout is less in leasing a car as compared to financing a car. However, the ownership of the car does not become yours when you lease a car, and that makes a lot of difference for many people.
When the vehicle you buy is new, you do not have to worry about maintenance costs. However, as it gets old, there are a lot of repair and maintenance costs involved that have to be taken care of by the owner. This does not happen in the case of leasing a car. When you lease, the maintenance costs are taken care of by the company that you’re leasing from. Every cost, right from routine maintenance to major repairs, is covered. This factor majorly comes into play when one wonders whether car leasing better than financing.
When you lease, you can choose a vehicle that you just wish to try out for a couple of years, and then return. After this, you can go for another vehicle. However, in the case of buying and financing a vehicle, you don’t have the liberty to take another vehicle for a certain period of time. You can only go for another vehicle when the car loan has been paid off completely and if you choose to sell your car and buy a newer one.
When you’re giving up the car that you’ve taken on lease for a particular period of time, the formalities are fewer. However, when you’re parting with your own vehicle, you have to sell the vehicle. This means that you have to find a buyer, then convince him/her to buy your car, and facilitate the entire transaction. There are more hassles than you can imagine in this case, which is an important point while considering when asking if car leasing better than financing.
Loan approval not required
When you’re planning to buy a vehicle, your financials come into play and on the basis of that a loan is approved and disbursed. However, when you’re leasing a vehicle, a small token amount is given to the leasing company as security amount. Beyond this, if there is any damage to the car or the car gets into legal hassles, the leasing company always has the option to take back the car.