What else can be a better asset than a vehicle for any entity to run its day-to-day activities? If you own a car, you can keep it as a long-term asset for your business. But what should you prefer: Buying a car or leasing it?
This might be one of the questions that come to our mind when any business owner thinks of having a car as an asset. When one thinks of using vehicles in their business, they are open to two options: either buying them or leasing them for a specified period.
The basic difference between leasing and buying a car is that buying means you acquire the car, either by making a lump sum payment or via installments. Leasing means using that asset for a specified period by paying periodical lease rentals. The basic difference between leasing and buying a car is the period of time for which you own the vehicle.
If you prefer leasing over buying, you can keep it for a specified time and need to make monthly payments. However, it won’t be the case if you own the car.
This post will cover all the crucial details about the difference between leasing and buying a car. We will mention the major points of difference between the two. So, let us check out the difference between leasing and buying a car.
Points of Difference Between Leasing and Buying a Car
If you are still wondering how to choose between leasing and buying a car? Here are the major points of difference that will help you to choose the best between the two. Let us check out the main difference between these two.
- You have the ownership for a specified period in leasing while it is not so in buying.
- You need to make monthly leasing payments, which is not the case in buying.
- Fewer upfront costs are there in leasing in comparison to buying.
- Returning or selling the vehicle is not your choice in leasing while it is not so in buying.
- Future value decreases over time, so leasing might be better in the case of a car.
Let us discuss the difference between leasing and buying a car in more detail but before that, let’s look at non-ownership car insurance.
What is Non-Ownership Car Insurance?
Non-ownership car insurance is a liability for folks who aren’t owning a car but need car insurance. It can be for someone who frequently rents a car or who might need proof of car insurance.
Non-owner car insurance covers the following.
- Medical expenses or other bodily injuries you cause to the other person.
- Car repair bills or any other property damage charges that you cause to the other person.
- It covers legal defense if you are sued for the accident you’ve caused.
Let us now look at the difference between leasing and buying a car.
What is the Difference Between Leasing and Buying a Car?
Many differences can help you choose between buying a vehicle or a car or otherwise leasing it. Let us discuss the differences one by one.
The basic difference between leasing and buying a car is when you get the ownership of that vehicle. You can keep it with you as long as you wish to. If you lease a car, you don’t have its ownership.
2. Wear/Tear or Maintenance
Another difference between leasing and buying a car is wear and tear or maintenance. If you have your car, you can do whatever with it. However, if you have a car on a lease, you need to take care of it as you can’t return it in bad condition.
3. Future Value
Assets such as cars depreciate over time. So, their future value decreases with time. It is important to decide whether you will choose the option that will depreciate your asset’s value.
4. Car Sale or Return
If you own a car, it is your decision whether you want to sell it or return it, or do anything with it. However, if you are taking a car on a lease, you cannot make such decisions alone as you need to return them with time.
5. Monthly Installment
You don’t need to worry about monthly installments if you have made all the payments while buying a car. On the contrary, you must pay monthly installments if you have a car on a lease.
These are the major things to remember while looking for the difference between leasing and buying a car.
The basic advantage one can enjoy when he buys a car is to keep it for as long as he wishes. You need to return the car after the specified period if you are preferring to lease the car. Many other major differences have been mentioned in the post above.