Lease or Buy a Car: Which is the best option?
Buying or leasing a car is all depends on your needs and requirements, and you need to make a wise decision so that your financial status doesn’t get affected. It can be decided based on some calculation, like resale value, usage, down payment, depreciation and of course the amount you can afford. I am going to share some advantages and disadvantages of leasing and buying a car.
The Advantage of leasing/renting a car
If you cannot afford to buy a new car, but you really need one, then leasing could be a good option. You can get the key of the car paying some amount, and generally the amount is not so much. If you are renting/leasing the car for business or commercial purpose, you will have one more benefit that you can reduce the rent amount and expenses from the earnings that will lower the income tax value. Now when you rent a car, you can save money during those periods and can buy a new car later. This way, you will have no hassle thinking about the old car and selling them. On the other hand, you will also save bank interest that people are charged when they get a car financed by the bank.
Disadvantage of leasing/renting a car
If you rent a car you, you need to keep a fixed budget so that you can pay the rent every month as long as you don’t decide to buy a new car. Most of the lease have some restriction that binds you in restriction. You can not exceed the given miles (according to the contract), For ex: if you have been given the limit of 10,000 miles per year, and you exceed that limit, you will pay cash penalties. When you rent a car, make sure the car is under warranty and the warranty period will not end before the lease period, else you might end up paying a lot for repair of the car.
Advantage of buying a car
When you buy a car, that’s truth that you need pay a larger down payment and then monthly payment plus interest, but there will be a day when the car will be yours, and then you can save a lot. If you have your own car, you can drive as much as you want, and manage or buy the car insurance what suits your need, You will have no restriction and you will be the owner. If you can afford to pay the whole amount in one go, this is the best option for you.
Disadvantage of buying a car
The main disadvantage of buying a car is paying a large amount as down payment. Apart from this, you also need to spend the amount on car insurance, and the resale value gets down like anything for cars. You can get good resale value if you only you know how to keep the car in good condition. Monthly payment, in this case, is normally higher than the rent. If you cannot afford to pay the installment, this could be the worst option, and you will have lots of trouble.