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.