Still confused? Yes. I am talking about cars. It happens with all people. They get confused about whether they should buy or lease a car when they decide first time in their life to let’s have a car. And they should get confused because it’s about money. According to the fact, almost 90% of people do not know the pros and cons of leasing vs. buying a car. But this blog will help you get clarity.
This blog will be going to be an unbiased stand on the topic of the pros and cons of leasing vs. buying a car. It will cover all the necessary points of both side. Both the pluses and minuses of leasing vs. buying a car.
Before entering into the main part of the blog, for those who don’t know about what is leasing or even for everyone who has blurred clarity. Let’s just know what leasing is.
What is Car Leasing?
Car leasing is a process where a customer gets a car from the dealer for a certain period and in exchange for that, they pay the monthly rent to the dealer. After the lease period get over, the customer must return the vehicle to the dealer. It means buyer the does not have ownership over that vehicle. But if they want to keep that car so they can buy it at a negotiated price.
And yes guys, negotiation is very important. So, start negotiating.
Pros and Cons of Buying a Car
One of the major cons of buying a car is you have to have money to buy a car. Don’t get confused. It’s a joke but your money is not a joke. So, you and everyone should understand all the major advantages and disadvantages of buying a car.
Social Acceptance – Whether you think about society or not buying a new car is highly accepted by society. And this is in the human psychology. It plays a significant role for purchasing a new car.
Complete Ownership – After buying a new car it is all yours. You can do whatever with this car but swipe away anyone on road. That is a crime. But yeah, getting complete ownership means you have full control of the car. You can drive for as many miles as you want, and can go to off roading trip. You can do anything with your car.
Low Interest Rates on Car Loans – New car loan interest rate is much lower as compare to used car loan interest rate. Almost every country follow this trend. So, it automatically saves your money.
Potential Tax Deductions – This may vary country to country. But it is a fact that if you buy a new car for business use then there are very high discounts available on taxes.
Warranty Facilities – New car comes with a manufacturer’s warranty. And the dealer will also offer an extended warranty beyond the manufacturer’s expiration date to their customers These warranties make it more of a safe bet to make a large purchase, in case something breaks down ahead of schedule.
New Car Comes With Latest Features – New car comes with a lot of features as compared to used a car. And it is a fact that whatever latest features are added to a car by manufacturers present in the new car. And while getting used a lot of time those features get affected negatively.
Low Maintenance – Repairing is one of the major point you should consider while purchasing a car. Although, both new and used cars need maintenance. But if you buy a new car then maintenance time period is long as compare to used cars.
High Depreciation Rate– If you are thinking that you will buy a new car and after some years you will sell that car and make money. Then depreciation is one of the main things you should keep in your mind that after some time your car’s price depreciated (lost its price value) by a high percentage. Yes, if you buy a car and start driving then from the very first-day car’s value is start depreciating. This depreciation rate varies from country to country. So, first, check the deprecating rate of your country then decide to buy a car.
Insurance-Related Issues– If you buy a new car with a car loan then Insurance charges are very important to you. All dealerships and financial institutions will require you to carry full coverage on your vehicle until it’s paid in full. Insurance premiums are based on several factors, such as the age of the vehicle. Premium is directly proportional to the newness of the car. So, take this point into consideration while purchasing a new car.
Low Return on investment – Sometimes it gets very difficult to get the ROI on your investment. And buying a new car is also one of those investments. I am not talking about very rich people. Yes, you guess it right. I am jealous of rich people because I am not. Jokes apart. Keeping a car is a liability in many ways. You have to pay monthly EMI, maintenance charges, repair charges, and many more charges.
Dealership Hassles – Sometimes it gets very hard to deal with dealers. Most of the dealers try to just sell you and earn profit. So, it is very important to negotiate with dealers and please find a genuine dealer.
Resale Problems – This is one of the major cons of buying a new car. Because just after buying a new car, car losts it value. And who knows, you can broke car in many ways. So, after several years, it gets very difficult to resale that car.
Pros and Cons of Leasing a Car
One of the major cons of leasing a car is again the same thing that you have to have money to get a car on lease. But this time it’s not a joke. It is a fact. So, while leasing a car always focus on charges that you may have to pay.
Lower Monthly Costs – Sometimes getting a car on lease can be expensive but sometimes you can get a cheaper deal.
Get New Car After Few Years – This is one of the best advantage of leasing a car. If you are a person who get bored after using anything after some time then leasing a car is a good decision.
Worry Free Maintenance – Leasing a car brings many benefits to you. As compare to owning a new car, you will not have to worry about the maintenances. All the maintenance will be done by dealer. But for surety check the contract before leasing car.
No Resale Worries – As we have seen earlier that there are a lot of inconvenience with resale of new car. But when you lease a car you do not have to think about resale of that car. You just have to drive the car for the time period and give it back to the dealer.
Tax Savings – Although experts say that you should own a car. But having a car on lease is becoming a trend, especially in urban cities. And now even almost every country’s tax policy is supporting this trend. So, check once tax benefits of leasing a car before having the car.
No Ownership – Having a car on lease does not give you the right of ownership. So, you have to follow all the points which will be mentioned in the contract between you and the dealer.
Miles Restriction – Car leasing comes with miles restriction which means is you can not drive over the limited distance (which is mentioned in the contract). For example, if it is mentioned in the contract that you only drive 50,000 miles within the time period of lease then you are bound to follow that.
Lack of Control – As compared to owning a car which gives you complete control over the vehicle, in leasing a car you will get almost negligible control over the car. Suppose you are a creative human and your creativity suddenly awakes and now you want to customize the car. So, you just can not do this. And even if you do this and if by chance at the time of returning the car to the dealer gets defective then you have to pay some charges for that.
Fees and Other Costs – Although you get a car with little down payment in the lease but different charges can burn your pocket. For example, if a car gets scratched or if you drive over the limit then you have to pay the charges to the dealer. So, before leasing a car read and negotiate all the possibilities with the dealer.
Who Should Lease a Car
I know guys, now you need a joke. So, here is a joke people for whom leasing a car is better than buying a car is for whom has money. I know it is a joke but there is some facts to it.
Now, seriously there could be many reason to lease a car. Here are some of most important points
1. If you have a reasonable money but you want to have a high price car then you can go with lease.
2. If you are a person who often get bored by using a car after some time then leasing can be better option.
3. if you are job person and you get paid on monthly basis then lease is better.
4. If you want to have a car for travelling a reasonable distance (miles) then lease is good for you.
5. If you are a person with good negotiation skill then obviously leasing is good option.
These were the top reasons. There could be many reason which vary person to person and country to country.
Whom Should Buy a Car
Again, if you have money then buying a brand new car is better than leasing a car. Here are some points given below which can help you decide whether you should buy a car or not.
1. If you want to have a car for very long time (for life time) then buying a car is best option than leasing a car.
2. If you have enough money so that you can do a good amount of down payment then you should go with buying.
3. If you are leaving in the country where the deprecation rate is lower then you can purchase a new car.
4. If you are a kind of person who wants to complete control over their things then no other option is good as compare to buying.
5. If you want to drive for very long distance or you want to do off roading and you do not have any problem with car getting scratched then buying a car is better.
6. If you are person who always want to customize things then obviously you should buy a car.
The Decision and The Advice
Now, guys, we have come to the end of this blog. I do not know how much you have learned from this blog. But if you are the person to whom money is important then before putting money into cars (or anything), do your proper research both online and offline.
And yes guys, forget to subscribe but DON’T FORGET TO NEGOTIATE.
So, this was the complete guide on pros and cons of leasing vs. buying a car. Team vedaon hopes that now you have a good sense of clarity on this blog’s topic. We hope now you will decide consciously whether you should buy a car or lease a car.
What is the minimum and maximum depreciation rate in India?
– The depreciation rate of car can vary between 5%-50% not just in India but across all over the world.
Which is better buying a car or leasing a car?
– It depends upon many things from the car depreciation rates to interest rates, fee and charges and many other things.
Can I lease a car for just several months?
– Yes, you can.
How can I save tax on my car lease?
– There can be many ways to it. You will get all the ways to save tax on lease into the link given below.
Thank You so much for reading this blog! If you have any feedback or questions or anything to say then please comment in the comment section below. We are waiting for your text.