Well, the basic difference between the leasing and buying a car is the ownership. When you purchase a car, it means you own your car. But when you lease a car, it means the ownership is still with the lessee and you only get the possession of it. You can lease a car either directly from the dealer or you can avail car loan from any financial institution to get the ownership.
Here are some differences between buying and leasing a car:
Many people lease a car just because the monthly installments that they pay is almost 30% less than purchasing a car. If you want to purchase a car, you are required to pay the whole amount of the car up-front to own it. While on the other hand, in case of leasing, you don’t need to pay a bulk money at the start in order to possess it.
Length of Ownership
Here length means the time period. When you purchase a car, you can keep it as long as you wish to. But as far as the lease is concerned, usually the time period is around 3 to 4 years. You can’t get the ownership unless and until you pay off the whole amount, as well as, you can’t handover it to other.
When You Want To Return Or Sell Your Car
When you buy a car in cash, you own it. So, if you want to sell your car at any time, you can either trade in the market or sell it for cash or in kind. But in the lease, the matter is totally different, all you need to do is to take it to your lessee and place it over there and simply end the contract. Keep in mind, in this case, you may have to bear heavy penalties.
The Tomorrow Value
In car leasing, you do not have the possession, so you can’t sell it unless the leased time is over. You have to bear the depreciation and wear and tear of the car. Resultantly, the future value of the car in leasing might be different as compared to the car you purchased on cash.
Under leasing, some institutions impose a certain type of mileage restriction ranging from 10,000 Kilometers per year to 15,000 Kilometers per year. If you exceed the mileage limit, you may have to pay extra for that. Alternatively, when you buy a car, there is no mileage restriction. You can drive as much as you want.
In a lease agreement, you can’t add or remove anything because you have to return the car at the end of the lease period to the lessee. But when you own a car of your own then there is no restriction regarding any modification or reduction on it.
It all depends upon your thinking and the needs with which you are approaching to have a car. The decision is yours, make your own calculation and reach decisions that can save you the cost.