Having a car is what most people dream of. The convenience of owning one as you do not have to worry about the traffic in commuting and travelling to where public transportation cannot go. However, buying one is so costly that even when you buy a 2021 Chevrolet Spark, the minimum wage in one month is still not enough.
A common concept among people is that buying a car is worth it rather than leasing. Why? Because after the contract of your lease you will have to return the car and unlike buying you will own it. Of course, you could extend the term of your lease contract. According to Cody of Carcody.com, it is possible to extend it with either formal or informal extension.
With cars getting more expensive over the previous years, people started to go for leasing rather. It is said by them that leasing is more convenient than buying one. Furthermore, let us enumerate each key difference from leasing and buying a car.
Key Difference between Leasing and Buying
The main difference between leasing and buying of a car is that leasing is a contract that allows one party to allow another party to drive a vehicle with the contracted period of time in exchange for payment. Some leasing contracts allow the other party to have the option to purchase the car after the contract, but if there is none, then you must return it back to the owner.
Buying, on the other hand, is a contract that you are purchasing your car either via installment or cash. Whether what option you choose, it will still lead into you owning the car after you have fully paid the amount stated in the bill of the contract. Once you have it, the rights are now yours and the company cannot take it away from you anymore.
Aside from the definition, let us dwell into specific characteristics of both sides to know more about their comparison and contrast.
1. Payments
Leasing can save you more money than buying. When you buy a car, you need to pay a downpayment to the company based on your credit score. And they will provide you with a constant payment you have to pay monthly until the whole value of the car is paid. Usually the fixed amount in installments is expensive, but it depends on the value of the vehicle.
Meanwhile in leasing, it is much less expensive in comparison with buying. It is because the payment is based on the depreciation in value of the vehicle over the lease period instead of the vehicle’s full value.
2. Ownership
People that lease can apply for nicer and more expensive cars than the one they can afford purchasing. And once they have signed the contract, they usually have two to four years to drive the car. When the contract expires, they can either extend the lease or purchase the car depending on the conditions stated in the contract.
However, when you buy the car, once you have fully paid the amount needed for it, you will own it. There is no need to return it to the company if you finished the loan. They will give the full rights to you and they have no authority to get it from you.
3. Warranty
When you buy a car, usually the warranty will be over as soon as you finish paying the loan. You can extend it if you want but you will need to pay it depending on the price offered by the company. Furthermore, if you do not have any car warranty, all of the maintenance and repairs will be coming out fresh from your bank account or pocket.
But when you are leasing a vehicle, it comes with a warranty covering the entire period of the lease. Most of the time, only maintenance to keep the vehicle in a good condition is the only thing that is required. And if you ever have experienced any mechanical issues, the lease got you covered for it.
Despite their differences from one another, they still are considered the best options depending on your financial status and preference. Let us discuss it in the preceding paragraphs.
When is Buying Better?
Buying is better if you want to own a brand new car that you will permanently earn and will serve as your asset. If you will be buying a car, you only need to be troubled by paying the balance you have monthly for approximately 4-6 years. And after that, you do not have to worry about the payments unless you need to do some repairs in your car.
It is also better if you want to customize your car. When you lease, you cannot just put some decorations in and on your car as you do not fully own the vehicle. But in purchasing it, you have all the authority to execute the things you want for your vehicle.
Additionally, you do not have to worry about any penalties you might be charged with if you own the car when travelling far away. As long as you can handle your finances, buying is the best option especially if you are a fully committed-driver.
When is Leasing Better?
Leasing is better when you do not want to pay expensively over a vehicle. Unlike in purchasing a car, you will not face struggles of looking for payments for your monthly installment. There is also a warranty whenever there has been a mechanical issue in your car. You do not have to worry about the costs in fixing it since leases come with a warranty that covers the repairs.
Despite just owning a car for a moment, you can still extend it or even purchase it depending on the contents of the contract. It is better to analyze it first and determine if leasing will suit you financially.
Conclusion
Leasing is now a trend as the prices of cars increase over years. With new technologies continuously being added to cars to better improve the performance and quality, many people are struggling to buy one and take leasing as their resort. Leasing is best when you want to save money while you can drive a car. Just make sure that it is worth it to make a lease.