A swanky car is a dream for every common person. However, not everyone can afford it. There are car loans or vehicle loans available but not everyone is granted a loan. Moreover, not everyone can afford to pay the high rate of interest charged by banks, finance institutions or lending organisations, on these loans. However, there is one way out which can help people to achieve their dream car without spending or borrowing much money that is . A car lease is a very convenient and good option for a person who wants to possess a car but does not want to spend a huge amount for it. It is an option in which you actually rent a car of your choice, for a specific duration of time. You do not purchase the car or in other words, you do not posses full ownership of the car. Moreover, the car is not even owned by the leasing company that provides the vehicle leasing services.
Difference between a car lease and a car loan
Many people get confused with these two terms and think them to be synonyms. However, there is a huge difference between the two. In a car loan, you borrow a specific amount of money from a financial institute and then pay a huge amount, generally a down payment at the beginning, and fixed monthly instalments to purchase a car or any vehicle. In this, you are the owner of the car and the car is fully under your possession. However, in a lease you give a down payment to the leasing company and fixed monthly instalments to hire or rent out a car for a specific time period. In this, after the specified time period you return the car to the leasing company or you can renew the leasing contract to re-lease the car.
Leasing a car has its own advantages and disadvantages over a car loan:
1 Middle class people can lease out a better standard or model car than you can afford, even after taking a car loan.
2 While purchasing a car you might think a lot or be confused on whether which car, of which company and which model to buy, as you has to put in a huge amount of your hard-earned money. However, while leasing out a car you just have to choose the best car available with the leasing company currently. Therefore, it means less confusion and pain.
3 The down payment and the fixed monthly instalments are much less than the down payment done and the monthly instalments paid in the case when you purchase a car. In addition, do not forget the high rate of interest you have to pay on the loan amount, which is absent from a lease contract.
4 The lease company is responsible for the maintenance and any repair work to be done on the car in case it breaks down but no such privilege is given in a car loan.
