With the rise of car leasing models, people are opting for it instead of buying a new car. But do you really understand what leasing a car is?
Leasing versus Buying
Leasing and buying a car are two different options for obtaining a vehicle, but they are very different from each other. Understanding the differences between the two can help you make an informed decision for which option is the best for you.
When you buy a car, you are making a financial commitment to owning the car, whether you pay it full or through hire-purchase. When you pay it in full, the ownership of the car belongs to you, and you are responsible for any maintenance, repairs, roadtax and insurance of the car. When you buy it through hire-purchase, the car ownership is under the person who loaned the money to you and becomes yours when you fully pay the car off.
When you lease a car, you are essentially renting it for a set period of time agreed by you and the leaser. You pay a monthly fee for the use of the car, but vehicle maintenance, service, roadtax and insurance is covered by the leaser, so you don’t need to worry about that side of things. But when your contract ends, the car has to be returned back to the leaser, as your “renting” period has ended.
Benefits and Drawbacks of Leasing
Leasing can be a better choice for those who only need a car for a short duration, as leasing can help you take care of the maintenance and service, and you don’t have to worry about disposing of the car as the car is returned to the leaser when your contract has ended.
If you’re a person that likes to change your car every few years, leasing can also be a better option for you as when your lease ends, you can switch to another lease with a newer car. These offer all the benefits of leasing and saves you the hassle of selling or trading-in your old car when you want to get a new car.
The drawbacks of leasing is that you’re still only “renting” a car, so any payments for the car won’t go towards you owning the car. So if you want to keep a car for the long-term, leasing payments will be higher than purchasing a car through a hire-purchase loan, as you still have to include the additional fees and payments when leasing a car.
Viable Alternative: Buying a Used Car
So you want to get a car for long-term use, but don’t want to spend so much on a brand new car, or dislike leasing which leaves you with no car at the end of your contract? Buying a used car can be the best option for you if you don’t mind it being “used” before.
When you buy a used car, you can avoid the high depreciation value that comes when buying a new car. And for cars up to a certain age, you are still eligible for hire-purchase loan from banks, so you still have the flexibility of choosing your payment methods if needed.
If you’re in the market for buying a used car, come visit ezauto.my, where we have a large variety of used cars bound to suit your needs!