Car Buying or Leasing- Which Option Suits You?

Car leasing is slowly getting into the list of option for car buyers in India. Earlier restricted to only corporates and eyed just as a tax saving affair, car leasing has rapidly gone up in the past five years in the country.

Now, businessmen and professionals too have started to look at lease as an option. While lease may give you lower monthly installments comparatively, but unlike car buying you don’t get the privilege of owning the vehicle at the end of its tenure. Let’s delve into more details to know the merits and demerits of both car buying and car leasing options.

1. Car Leasing Advantages

1. Low monthly payments: The best part about car leasing is that you will have low monthly payments compared to a bank loan. Moreover, the down payment in most cases is not there at all. That said there is not enough load on your savings if you go for car leasing option.
2. Switch cars more frequently: With the lease option, you have the privilege of changing cars after a fixed interval of time. You can upgrade to a more contemporary model which comes equipped with all the modern technological gadgets and superior safety features than your previous car. And not to mention the amplifying social status of yours with each new car.
3. No more selling your used car:You can simply handover the keys of the car once the lease contract ends. No need to worry about the hassle of selling the car yourself or whether you’ll get a fair value of your used vehicle. Once the contract ends, you can opt for a fresh lease on a different car of your choice.
4. Car depreciation? No worries: As you don’t have to keep the vehicle once the contract ends, you need not worry about the depreciation value of the car.
5. No more waiting for loan approvals:Unlike buying a car on finance wherein you have to wait for the loan to get approved, leasing a car ensures your waiting game ends.

 

 2. Car Leasing Disadvantages

1. Though you won’t be required to pay any down payment but your credit history has to be very strong to convince the leasing company that you won’t default.
2. You will only drive the vehicle as a tenant who will be surrendering the car at the end of the contract. No ownership feel.
3. Right from day of the lease sign off till the last day of the lease contract, you need to pay monthly installments.
4. You are bound by fixed kilometers in a month/ year and if you over do them, hefty charges are levied.

 

  3. Car Buying Advantages

1. Fruitful for long termers: If you plan to keep the car for several years, there is no better option than buying the car, as leasing may incur low monthly installments but in the long run buying the car would be more fruitful. Once you have paid the full loan amount, the car becomes free. The more you drive the less it costs.
2. No limit on kilometers: Once you opt-in for loan, the car is yours and there is no capping on how many kilometers you should do in a month/ year. Unlike lease wherein you are bound by certain parameters, buying car on loan makes it an asset for you which can be sold whenever required.
3. Wear, tear, no fear:While leased cars have to be kept in top notch condition and every dent makes you answerable (in terms of money, obviously), cars taken on loan are free from any such queries. You need to pay a particular sum for major wear & tear in the leased car.
4. It’s Your Car!:Yes, the loaned car is your car. You are responsible for its maintenance, insurance and other details and you can do whatever you want with the car and, there is no body to question you over it. Though the service part is an added burden on cars on loan but, for people who wish to keep cars for more than 5 years, this should be the ideal way to go forward.

 

 4.Car Buying Disadvantages

1. Car’s value will depreciate with time and you won’t be able to get the same price at which you bought it.
2. All servicing and maintenance costs would be borne by you, which are likely to increase as number of years of usage increase.
3. The loan payments from banks are generally on the higher side compared to a leased vehicle.

 

So which one should you go for? The answer lies on your usage pattern. If you are someone who would be using it for daily commute from home to office and changes the car every 2-4 years, the lease option would be the ideal way to go for. However, if you are thinking of keeping it for several years and are eying it as an asset, the car buying option would suit you more.

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