Friday, June 30, 2023
By CarKhabri Team
Should You Lease Or Finance The Car?
The days have gone when buying a car was no less than a dream for many people. With changing lifestyles and financing options, nowadays purchasing a car is no more a daunting task for a person. However, for that it is necessary to have substantial funds in your bank account to pay your monthly instalment for financing the car. Sometimes, paying the monthly instalment on time isn’t possible for buyers.
Understanding the problem of such persons car dealers have started offering the facility to lease the car. Leasing allows them to drive the car of their choice for a fixed period by paying the agreed price for that. The notable feature of leasing a car is that it offers an option to drive a different car every time to the leaseholder. Leasing a car is a good option for people who cannot afford to buy a car or who don’t have space to park their car safely. The facility of leasing a car has created a situation of fuss for prospective buyers that whether they should lease a car or get it financed.
Understanding the concern of such buyers, this blog highlights the basic difference between these concepts.
Financing The Car: When a person buys a car in cash pays its full price to the dealer. When he finances his car he has to pay a fixed sum of money as an instalment to the financier over time.
What Is The Process Of Financing? When a person buys a car on finance he pays fixed money as a down payment for buying a new vehicle and the remaining amount in instalments. This instalment also includes the rate of interest. As he pays the instalment his ownership increases. Once he pays full instalments he becomes the full owner of the car. Here it would be important to mention that until he doesn’t pay full instalments he can’t sell the vehicle.
Significances Of Financing the Car: Financing comes with many benefits. Some of them are:
- When you finance a car you are free to drive it at your convenience without any concern about mileage or paying extra money for driving extra kilometres.
- Financing a car offers you the freedom from paying for any wear and tear to your car. Depending on your needs you can repair or replace the damaged components.
- Being the actual owner of the car, you are free to sell it once you have your full instalments. You can use that money for upgrading to the next car.
Disadvantages Of Financing The Car: Although financing the car protects you from the tension of paying the full price of the car at the time of its purchase, it also comes with some disadvantages:
- However, financing agencies offer you a wide option of getting the monthly instalments determined according to your ability. Sometimes due to other financial engagements, it becomes different for a person to adjust his other expenses along with monthly instalments for the car.
- As the owner of the car, you are responsible to look for its maintenance and regular servicing. Leasing the car offers you freedom from all these tensions.
- Financing the car minimizes your options for buying a car due to the cost of monthly instalments. Because financing agencies check your credit score and ability to pay instalments on time. Thus, assessing your financial ability they finance your vehicle accordingly.
What Is The Process Of Leasing? Leasing a car is the same as leasing some property. You have the freedom to drive the car of your choice for a fixed period and then return it to the dealer at the end of the lease period.
Advantages Of Leasing The Car: The benefits of leasing a car are:
- As you have to pay the cost of leasing the vehicle according to your budget, you are free to drive an expensive vehicle of your car without any concern about paying its full cost.
- Leasing a car offers you freedom from the tensions of its maintenance and regular servicing. That means you don’t have to pay extra money for any wear and tear.
- The most important benefit of leasing the car is the low cost of the lease amount compared to financing a vehicle.
Disadvantages of Leasing The Car: The disadvantages of leasing the car are:
- The company or the dealer leasing you the vehicle restricts you to drive the car up to fixed kilometres during the lease period. You will have to pay extra charges for driving extra kilometres. This puts an extra financial burden on your pocket.
- The most disappointing disadvantage of leasing the car is that you aren’t the owner of the car and have to return it to the company from whom you have leased it.
- As time passes, leasing a car becomes more expensive than financing a car. There will be a point when you will realize that buying a car is cheaper than leasing.
Conclusion: Financing and leasing a car are both beneficial deals that offer you the freedom of owning a car according to your budget and preferences. Depending upon your financial condition you can opt for any of these options.