Whenever you need to drive a car, you may take on any of these two options – buying a car or getting one on a lease. When you're buying a car, you have free rein over its customization, although you’ll have to bear the brunt of its customization. On the other hand, cheap car leasing allows you to drive a car from a lessor for fees much lower than paying for your own car’s purchase price, but you have no equity over it unless you opt to buy it. Whatever your choice is, you’ll always have to assess the practicality of your own situation before you go for one – getting a car, after all, is also a lifestyle choice. For that, it pays to check out the following differences between buying a car and leasing a car.
When buying a car, you must expect that loan payments are as large as they can be because you’re paying the purchase price – one that gives you full ownership in return. Add to that the fact that your purchase price, when made monthly, will include interest charges, finance charges, taxes, and other fees. Of course, the same cannot be said when making lease payments – you’ll only be tasked to cover for the car’s depreciation rate within the lease term, apart from rent charges, taxes, and other fees.
Of course, upfront payments for buying or leasing cars are by no means similar to one another. For purchased cars, you’ll be required to cover for the down payment of the purchase price, subject to costs covering taxes, registration fees, and other pertinent fees. As for leasing a car, you’ll be required to cover for payment for the first month upon claiming, as well as a security deposit that can be refunded one the lease period ends. That may also include a down payment, taxes, registration fees, and other pertinent fees.
As the key difference between buying a car and purchasing a car, your ownership status over the car you use helps define your rights over it. For a purchased car, you get to keep it and customize it freely without any restrictions – the high price you pay for purchasing it affords you with full control over it, as it’s also listed as among your properties. For a leased vehicle, you only get to use it within the lease period – you don’t hold the same freedom over it compared to a car you own, unless if you end up negotiating with your lessor on a deal to purchase it.
Customization also varies greatly between a purchased car and a leased car. Of course, there’s no stopping you on how you should customize your purchased car, for as long as it’s in compliance with specific laws. For a leased car, however, you’ll have to abide by your lessor’s interests against customizing it, as it may severely downgrade its value for sale. Additionally, you’ll have to pay for whatever damage found to have been inflicted throughout the duration of your lease period.
Termination and Return, and End of Term
When you choose to sell your purchased vehicle even though you still have an outstanding balance waiting to be paid, you may do so at your own discretion. You may even want to use part of the money from the sale of your car to pay off the existing loan payments. However, when you choose to terminate your lease contract early, chances are, you’ll have to pay for the rest of your lease period. Such, of course, would end up becoming costly for you, so make sure to verify your schedule first before signing up to use a leased car.
Obviously, if you want to exchange your purchased car for a new one or add something new to use in your garage, you’ll have to buy from the dealership or from used-car markets. Selling your previous purchase is, of course, all up to you – subject to your needs and your financial capacity, of course. As is customary for a leased car, you must return it to your lessor once the lease period ends and pay all pertinent costs.
Once you finish your loan payments, you no longer have to worry about having to cover for more payments for your purchased car. As for returning a leased car, you may want to lease another one or purchase your own for you to continue driving.
Value, Mileage, and Wear and Tear
Although a purchased car’s value depreciates in time, you’re free to dispose of its cash value as you please – sell it, continue using it, upgrade it, you’re free to do whatever you want with your own purchased car. The same, of course, is vastly different for a leased car – you may not have anything to do with its depreciation as it’s covered by your lease payments, but every penny you pay to your lessor doesn’t afford you with any sort of equity over it.
While it comes to mileage, you’re free to manage that on your purchased car, but you have to make sure to clock in as fewer miles as you can if you wish to recoup a larger sale value from it. Lessors, on the other hand, limit their lessees within a limited number of miles for their leased cars, subject to negotiation of course. The same logic applies for wear and tear – you shoulder your own costs for your purchased car and risk running down its resale value, and you pay your lesser with extra charges for every damage done on the leased car you’re using.