If you wish to have your own transport, the chances are you will be looking at car loans to fund the purchase of the vehicle of your choice. While most people approach banks and financial institutions to apply for car loans to drive home a new set of wheels, car lease is an alternate option that is gaining a lot of popularity in recent times. There are advantages and disadvantages to both purchasing a new/used car by securing a car loan and leasing a car. Here we will compare both options, so it is easier for you to find the solution that best meets your requirements.
Car lease can be a viable option for those who wish to ensure that their monthly expenses are low. Usually, car lease payments are almost 60% lower in comparison with the EMIs you would be paying in case you buy the same car by availing a car loan.
Another major benefit of leasing a car as opposed to purchasing it through a car loan is the warranty. In case you buy a new car and it has a significant mechanical problem soon after the warranty has expired, you could incur a lot of costs in case your vehicle is not covered under a comprehensive car insurance policy. Leasing a car, on the other hand, will ensure that you need not worry about the warranty of the car as the leasing company will take care of everything.
One of the most crucial reasons as to why car lease is gaining importance over car loans is the fact that there is hardly any stress or loss of time involved at the time of selling the vehicle. Considering how quickly the prices of cars depreciate, selling it after a few years for a good price could be difficult. Taking a car on lease would mean no stress and loss of time at the end of the lease tenure. All you will have to do is decide whether you want to extend the lease or go for another vehicle.
When you take a car on lease, you will need a predictable and stable lifestyle in order to ensure that your monthly payments are made consistently. Your source of income must be stable. In other words, you need a stable job during the course of the lease tenure. In case you face a significant medical expense or lose your job, your finances can be upset to the point where you may not be able to afford your lease payments. Taking a car on lease will require you to be more disciplined with regard to payments because you don’t have the option to sell the vehicle and close the loan as you would if you had taken a car loan.
One of the other concerns with leasing a car is that simple things such as long drives or procrastination on periodical maintenance can see you incur heavy costs. It is therefore essential to carefully read the fine print of the lease agreement in order to avoid any kind of confusion later on. It is also essential to understand that while leasing a car comes with plenty of perks, you usually end up paying more over the long term. However, leasing a car for the short term can work out in a cost-effective manner, thereby making it important to understand your requirements before deciding to purchase or lease a car.
There are plenty of advantages to purchasing your own vehicle. Firstly, you can do with the vehicle whatever you please without having to worry about fines and charges. You can drive for as many miles as you want with no restrictions. You also have the freedom to customise it to fit your likes and style. One of the best things about owning your own car is that as long as it is covered by a comprehensive insurance policy, you will not be at risk of losing out financially. It is important to ensure that the car is well-maintained in order to get the best out of it and to incur minimal costs on repairs and maintenance.
Taking a car loan to purchase a car would mean that you will be paying a lot more on a monthly basis than you would if you were to lease a car. The entire responsibility of the vehicle will be yours. Not only will you have to meet regular maintenance expenses but also pay for all kinds of repairs and damages to the car, and these expenses can be especially high if you are not covered by a comprehensive car insurance policy.
Considering the fact that buying a car can have its advantages and disadvantages in comparison with leasing one, it is essential to determine your requirements clearly in order to choose the right option. Leasing a car works out better if it is only a short-term requirement. Securing a car loan to purchase a new car can work out better in the long-term. Weighing the advantages and disadvantages of both options can help you make an informed decision.
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