Is Leasing A Car Better Than Buying One?

Posted by Tarun Aarya on February 12th, 2018

You can lease a car with the help of car loan, then why should you consider leasing a car? Well, there are many benefits, but before that, we’ll first look at how traditional leasing works.  When you borrow loan from a financial institution, you make monthly payments for a certain number of years. Each payment consists of interest and also a part of the capital. With each payment, the loan amount is reduced, and the car becomes yours after the loan period. You can keep it as long as you want and modify it in your way but then you should be prepared for lower resale value. One of the main drawbacks of going for buying a car on loan is that it requires down payment, paperwork, insurance and you end up paying more for it when the resale value of the car would have come down significantly.

So should you go with leasing let’s find out?   

On the face of it, leasing is more appealing as monthly payments are usually lower. You are not paying the principal. You drive the car during when it is new. When you drive a late-model vehicle, it is usually covered by a warranty of the manufacturer. It means that neither you nor the car leasing company has to worry about the oil change and maintenance. Another major advantage of driving a leased car is that you’ll be able to drive an expensive vehicle that may otherwise be difficult. There is no need to be bothered about the resale value of the car, and as a lessee, you don’t have to worry about selling it when the lease gets over. At the end of the lease, all you have to do is to just drop the car at the dealer. There are many corporate car leasing companies from whom you may be able to get the car easily.

But What Are Downsides of Leasing?

A simple calculation at the back of the paper may tell you that you may end up paying more than loaning a car. If you keep on leasing one car after another, the monthly payments may continue to eternity.  Lease contracts often have an upper limit of some miles that you can take the car to. And you may end up paying penalties if there is significant damage to the cars.

Finally

When you go to car leasing company to lease a car just look one for a shorter duration. Then you’ll be able to realize the true benefits of leasing.