Whenever making purchase decisions, many people are always confused on whether to buy a new vehicle or to lease a vehicle. Leasing allows you to use a vehicle for a specific period of time. Before considering on leasing a vehicle, you should outweigh its benefits over limitations as compared to buying the vehicle.
Pros:
1. Less monthly charges: Leasing method is one of the inexpensive means of acquiring a vehicle. Leasing monthly payments are 60% lower as compared to a monthly fee for buying a new or old car through an auto loan.
2. Low down payment: Some of the leasing companies require you to pay a smaller amount as down payment for the vehicle while others don’t ask for down payment.
3. Warranty protection: Once you lease a vehicle, you will have a comprehensive coverage on any mechanical issue, oil change, and maintenance. In buying the vehicle; when the warranty runs out, you’re not covered.
4. No worry on vehicle depreciation: You don’t have to worry about depreciation of the vehicle or plans to sell it. Once your leasing period is over, you can return the vehicle to the leasing company.
5. Access to expensive vehicles: Leasing allows access to better equipped and highly priced vehicle that you couldn’t have been able to afford.
6. Latest model: After the expiry of the lease period, you can return the vehicle and lease another new vehicle. This gives a chance to drive the latest model after two or three years depending on the leasing agreement.
7. No upfront sales tax fee: Sales taxes are calculated based on mileage after leasing the vehicle. This leads to less sales tax.
8. Reliable car: You don’t have to worry about car breakdown especially with old models because leasing gives you a chance to drive new models which are more reliable.
9. Latest technology: Diving new models you will benefit from the latest in-car technology fitted in the car.
10. Fewer expenses: Leasing new models will help you reduce the cost of maintenance and replacing some parts.
Cons:
1. Restrictions: Leasing a vehicle restricts to a certain number of miles. You’re also required to comply with the various leasing terms because going beyond the leasing agreement terms can attract extra charges.
2. Stable income: It is difficult to end the leasing contract before the expiry period. Therefore, if you consider using the leasing method, ensure you have a stable income to constantly pay the monthly charges.
3. Expensive in the long run: If you always rely on leasing a vehicle, it will cost more compared to taking an equivalent loan to buy the vehicle.
4. Continuous monthly payments: Leasing vehicle often will lead to continued payment of monthly fees. If you bought the vehicle, you will get its value after the loan is paid off.
5. High insurance cover: You have to pay more for insurance coverage when leasing vehicle compared to the insurance of a bought vehicle.
6. Requires proper maintenance: Leased vehicle needs to be properly maintained otherwise you will be forced to pay for wear and tear charges when you return it to the leasing company.
7. Early termination fee: If you want to return the vehicle before the lease expires, you will be forced to pay the early termination fee and a penalty which are equivalent to the full amount of that lease term.
8. Return it the way it was: When returning the vehicle, you need to configure it like it was apart from few exceptions like wear and tear or any professional tinting is done on the vehicle.
9. Property of the leasing company: Leased vehicle remains the property of the leasing company and can’t be used as collateral when seeking financial assistance from a banking institution.
10. Termination of leasing agreement: Any breach of leasing agreement could lead to cancellation of the leasing contract by the leasing company.
