Leasing or buying a new car? This is a question that bothers many people. How do you know what option favours you? There are many factors to consider when deciding to buy a car or lease. Before making a decision, one needs to know the distinctions between the two options.
When you lease a vehicle, you pay to use it for a specific time. When that time expires, you will be required to renew the lease or end it. A lease can go on for long periods, and you can move on to a new lease anytime you want. However, buying a car means complete ownership of the vehicle. What are the pros and cons of buying or leasing a car?
Pros And Cons Of Leasing
Pros:
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Low Monthly Cost
One of the major advantages of leasing a car is the lower monthly costs. The monthly cost you must pay when you lease is much lower than the down payment required for buying a new car. Hence, you can lease a luxury car that you might not be able to afford normally easily.
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Quick Resale
Another great benefit of leasing a car is how quickly you can dispose of it when tired. If you get tired of a leased car, all you need to do is return it to the car rental service you leased it from. People’s tastes change over time. When on a car lease, it is easy to change car models and brands.
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Tax Benefits
If you get a car lease for business purposes, you can become eligible for certain tax deductions from the government. This is especially useful for business owners. Tax payments can get troublesome sometimes. However, tax deductions can help alleviate some of the cost.
Cons:
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No Control
One of the major disadvantages of leasing a car is the need for more control. You can’t sell or trade a leased car as it is not your property. You only have temporary access to utilize the vehicle. However, it is not your property. Hence, you have limited control over the vehicle.
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No Ownership
Ownership is the major problem of leasing a vehicle. Unless you buy the car after the lease period is over, the ownership of the vehicle rests with the leasing company. This causes restrictions as you will have to restrict your driving to a specific area. There might also be additional costs at the end of the lease.
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Fees
When leasing a car, you must fill in the mileage you will move on the vehicle. The fees you will be required to pay depend on the mileage you put on the vehicle. Also, modifications and any damage caused to the vehicle will incur more costs at the end of the leasing period.
Pros And Cons Of Buying
Pros:
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Total Control
The main advantage of buying a car is absolute control. If you buy a car from a dealership, you have full control of the vehicle. You have free rein to modify any part of the vehicle the way you want. Buying the car also gives you the freedom to go anywhere you want to with the car.
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Zero Restrictions
Unlike when you lease a car, there are no restrictions when you buy a car. Buying a car means you can do whatever you like with the vehicle without being condemned. No fees are attached to mileage or damage inflicted on the car by the owner.
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Long-Term Cost
Regarding long-term costs, buying a car is more advantageous than leasing. The cost of buying a car may be hefty at first. However, it is much cheaper to buy a car than to lease one in the long run.
Cons:
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Value Depreciation
It is a regular occurrence for cars to lose their value within five years. The value of vehicles depreciates gradually with time. Wear and tear also takes its toll on cars, and owners must maintain the vehicle regularly to keep it in top shape.
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Running Costs
Running cost is something you can’t run from as a car owner. If you buy a car, you must shoulder all the cost of fueling and caring for the car. If the car develops a fault, the cost to fix it will come out of your pocket.
Conclusion
Many people are still deciding whether to buy a car on lease or get full ownership of a vehicle. Leasing and buying have their advantages and disadvantages. You become eligible for tax deductions when you lease a car for business. Buying a car directly is cheaper than leasing in the long term.