Leasing a car: Is it worth it?

What is car leasing? Leasing a car is renting a car for a long period, usually between two to five years. Car leasing is an alternative to purchasing a car. Businesses that want to avoid the high expenses of owning a car but still require the vehicles usually lease their official vehicles.

With the increase in the cost of living due to the current economy, leasing cars has become more popular. When it comes to deciding whether to lease a car, it might be a tough choice, but with the aid of this article, it will be easier to choose if leasing a car is the best option.

What is the difference between buying a car and leasing a car?

When buying a car, one takes the title to the car and can use it to build equity. One can either buy a car with cash or through a car loan. If a car is bought through a loan, it becomes owned after the loan is paid off. Buying a car means taking total control of all aspects, including maintenance. 

Unlike buying a car, leasing a car is paying to drive the car for a period of time, so there are limitations to what can be done with the vehicle. There is a cap on the number of miles the vehicle can be driven for. There are also limits to the modifications that can be made to the car. When the lease expires, the lessee can either choose to renew the lease, buy the vehicle or return it to the car dealer.

Advantages of leasing a car

• Lower monthly expense

Leasing a car, unlike buying one, does not require a high down payment, which can help reduce monthly expenses on driving. This reduced monthly cost can even help lease a more luxurious car than one afford to buy.

• New car when the lease expires

With the release of different cars with better tech upgrades every year, leasing is a more flexible option for changing a car. Since a lease has a shorter use period than permanently owning a car, it is easier to switch to newer cars with a lease than buying a new car.

• Warranty covers maintenance

Most car leasing companies usually offer a warranty for three years, covering most of the basic repairs. Depending on the lease contract, one can save some money on unforeseen repairs that the car might need.

• No worries about resale value

Since a leased vehicle is not owned, the user won’t have to worry about the resale value. At the end of the lease, they must return the vehicle to the dealer unless they choose to buy it.

• Possible tax deductions

If the car is to be used for business, then a lease will be better than buying the car. A lease affords more tax deductions than a car loan because the Inland Revenue Service allows employees to remove depreciation and financial costs on their monthly payment.

Disadvantages of leasing a car

• No ownership/reduced mileage

The main con of leasing a car is that one does not own the vehicle. Apart from the restrictions of how far the user can drive the car, one should also note that modifications to the car can incur additional fees to reverse any changes made after the lease ends.

• Lack of control/no resale value

Another disadvantage of leasing a car is that the lessee lacks total control over the vehicle. Since the car is not owned, it cannot be sold to others. Since the lease has to be renewed to prevent the vehicle from being taken away, the monthly costs and unforeseen costs might build up.

• Fees and other minor costs means total costs cannot be projected till the lease ends

Leasing a car also comes with some minor costs and fees, which means the total cost of using a leased car cannot be projected till the lease ends. The fees usually apply when one exceeds the given mileage. Fees also apply for modifications to the vehicle and too much wear and tear to the car. Early termination of the lease contract also has fees.

Deciding whether to lease a vehicle at the end of the day depends on the individual’s needs and finances. Leasing is a good option for people looking to use a new car every few years or want a lower monthly cost on cars. It’s also possible to lease a car of higher luxury value than one might not be able to buy. 

The editorial unit