What are Various Pros and Cons of Car Leasing?
The simplest way to own a vehicle is opting for a conventional car loan. All you have to do is to borrow money from the lending institution, and then amortize it with monthly repayments. A large part of this is interest payment. Once you have paid the loan in full the car is yours. But you should be ready for lower resale value. But are you aware of leasing as an option that is offered by the various car leasing companies? Let’s see the pros and cons:
Pros of Car Leasing
Leasing is more appealing than buying, and the monthly payments are usually lower as you are not paying any principal. You are just borrowing and making the payments for taking the services of the car. Some key advantages of the leasing are:
- The car that you get in the lease is in the best condition and is usually in its trouble-free years which means that you are getting an almost a new
- Such a car is usually covered in the manufacturer’s warranty. It means that you get oil changes for free and you may also get the scheduled maintenance for free.
- While leasing you are buying the car. It means that you can drive premium cars as well. It means that you get a higher car that you could have afforded and the vehicle might be better suited than what you might have been able to afford
- When you go for car leasing, you will have to bear fewer maintenance headaches. You should lease a car which is within the warranty period. In this way, if something happens to the car the repairs are covered in the warranty. Then other car companies offer free routine scheduled maintenance during the lease term.
- When you go for leasing, you will need lower cash up-front. Most car leases require hardly any down payment. It makes getting into a new car more affordable and fees up to the cash for other things. But you can choose to make a down payment or trade your old vehicle to reduce your monthly payment amount. This preservation of capital is a strong incentive to lease the car.
- Leasing also means that you don’t have to pay more tax. As you are not purchasing the vehicle, so the tax outgo is lesser in case of leasing as well.
- Easy to Return-With leasing the headaches of selling the used car is eliminated. Once the lease ends, all you have to do is to return the car to the leasing company.
Cons of Leasing a Car
- If you want to end your lease agreement, then you will have to pay a high termination charge as well.
- When you are leasing a car, you will not get the ownership, but you are paying to get the services of the vehicle.
In the End
There are many car leasing companies out there. But when you are going for leasing, make sure that you have read the terms correctly.