Own your Dream Car
Today!

Car Leasing Considerations

0 Flares Twitter 0 Facebook 0 Google+ 0 0 Flares ×

As the term implies, car lease allows you to drive a car for hire. Like a car loan, it is one way to have a new car when you don’t have enough cash to make a lump sum payment. However, unlike a car loan, you don’t gain immediate ownership of the vehicle with a car lease, although it is in your possession. These are some elements you need to be aware of if you’re considering a car lease.

Costs

A major and possibly the only direct advantage with leasing are the lower monthly payments. With car lease, you will only pay for the car’s rental, compared to if you purchased the car through a loan. However, it pays to know that you need to have a stable source of income and extra funds, because it could be harder to get out of a lease contract if you unexpectedly meet a financial disaster.

Duration

The overall effects of leasing depends on two scenarios- whether you intend to lease the car on a short-term or long-term basis.

One advantage of short-term leasing is that you don’t have to secure a down payment. You will only pay for the time that the car is in your possession by making monthly payments. You can rent the vehicle for as little as 24 months, which gives you more flexibility.

On the other hand, long-term leasing could be more expensive. For example, if you leased the car for up to 60 months and decided to cover the remaining costs and own it right then, it’s almost certain that you have paid more than you would have if you took a car under a loan. If you continue on leasing, you will still make monthly payments wherein you wouldn’t have to if you bought under a loan and you finished paying within the agreed terms.

Ownership

With a car loan, you will be entitled full ownership of the vehicle as soon as the contract begins. You can resell it for profit, trade it, or perform design changes on the car. With car leasing, on the other hand, you won’t be able to sell it, paint it, add bumpers or rims, or paint it without the leasing company’s approval. You will never own any right to the vehicle unless you pay for the remaining depreciation costs at the end of the contract.

Repairs and Maintenance

Fortunately, most car warranties cover for repair costs, whether you lease the car or not. However, with leasing, you will still be responsible for maintenance and repairs, especially accident-related ones. In fact, you need to take extra care of the car when you lease, because you might be charged high costs at the end of the contract if you didn’t maintain the car properly.

Insurance

Most often, a car lease requires gap insurance, which is used to cover the gap between the remaining value in the lease and the car’s total value. Should the leased car be destroyed or stolen, this insurance will give you protection. This is one advantage of a leased car against traditional car loan, because leased vehicles require gap insurance, which can help you save a good amount in depreciation costs.

Leave a Reply

© 2013 Top Car Finance

0 Flares Twitter 0 Facebook 0 Google+ 0 0 Flares ×