Deciding whether to lease a car is quite challenging because the option has pros and cons. For most individuals, choosing to rent a car is a matter of priority. When you lease a vehicle, you can only use it for a specific time and then return it. Unlike buying a car, leasing means you can enjoy lower monthly payments. Here is a brief description of the five pros and cons of leasing a new vehicle.
The Duration you Intend to Keep the Car
Before deciding whether to lease or buy a car, it is vital to ask yourself how long you intend to keep it. If you need it for long-term purposes, it is best to buy one instead of leasing it. Remember that purchasing a car is a financial commitment. You, therefore, need a significant amount of money to buy one. If you do not have the finances, then leasing is suitable.
On the other hand, if your preference is changing cars after some time, leasing is ideal. This is because most lease deals last from twenty-four to forty-eight months. When this duration ends, you can return it or buy it, depending on your preference.
For leasing, you do not have to pay the entire amount upfront. The cost is spread over time, and you can make payments slowly. Notably, this is not to say that there is no upfront cash. The upfront cash is based on your deal or the car you select. Leasing companies vary, but you have to pay a payment worth three to nine months’ fee for most.
Car Ownership
In leasing, the vehicle is not yours because it is the property of the leasing company. It is simply a long-term hire arrangement. People who choose to lease vehicles do not consider the aspect of ownership. Also, you will not get the car’s equity despite making monthly payments.
Aside from this, you cannot resell or trade-in the car because it is not yours. However, if you prefer to call the car your own, leasing might not suit you. Times are changing, and options like personal contract purchase (PCP) and finance agreement are appropriate.
What About Depreciation?
For cars, depreciation is normal with time. It begins immediately as soon as you drive your vehicle from the dealership. Aside from this, you might want to sell the car after a while. You will sell it at a much lower price, which might cause inconveniences. That is why leasing is a preferable choice. In leasing, the monthly cost absorbs depreciation. This is not to say that leased vehicles are not prone to depreciation.
Interestingly, it is worth stating that vehicles from premium brands are not as expensive to lease compared to a car loan. The company, therefore, leases them out for a lower monthly rate. That is why people opt for luxurious cars while leasing.
What is Your Money Value?
Deciding on the value is influenced by various factors, including your preferences. For example, leasing is generally cheaper than buying your car. However, when you look at this option closely, you realize that you cannot consider it an investment because the vehicle is not yours. Always ask yourself, what is my car worth? If you can afford to buy one, then go ahead. However, if you cannot, leasing is preferable. For people who like driving new rides, a lease is ideal.
What is the Difference Between PHP and PCP?
People often confuse personal contract purchase (PCP) with personal contract hire(PCH). Both these options are pretty popular types of vehicle leasing. Notably, both options are similar and different at the same time. In both options, you can make upfront payments.
However, for PCP, a deposit is ideal, while in PCH, you need to make initial payments. After this, you will decide how you intend to cover the monthly payments and set the duration. PCH does not allow you to own the car at the end of the leasing duration-rather; you are to return it.
On the other hand, PCP is ideal as it offers clients various options. You can pay a final payment and own the car for good or return it to the leasing company. Notably, the final amount for most cars is usually predetermined in the lease contract.
Wrapping Up
There is generally no right or wrong when leasing and buying vehicles. It all comes down to an individual’s preference. However, leasing might not be the best option if you need a car for long-term purposes. For those who like new rides every year, leasing is ideal.
