Picking a new car can be a tedious task; it requires lots of research. It’s always advisable that you consider all your options first before deciding. This includes the way you wish to purchase a new car. You can buy a new one through any car dealership or choose to lease a car at car rental companies. Both of these options have advantages and disadvantages.
The most common reasons why you should lease a car is because of the low monthly payments. Through car leasing, a person can easily get the latest car model after each lease period. Over the last decade, car leasing has become a popular choice for individuals and businesses for their versatility. According to a research by Insta Motor, there was a 91% growth in car leasing since 2009. While car leasing may sound attractive, it also has some disadvantages.
If you live in a big city with a very good public transportation system, then maybe owning a car isn’t for you. Additionally, taking public transportation may even be faster than driving a car around. If you really need a car for a day, you can simply rent one. Renting a car will also help remove the financial burden of owning one. Payments for car insurance, parking, and maintenance can easily add up.
If you seldom need a car to take you around the city, it only makes sense to forego buying and just rent one when the need arises.
Monthly Cash Flow
Renting a car entails lower monthly payments compared to a car loan financing. When you rent, you only pay for the depreciation value and not the total cost of the car. Let’s say a brand new car costs $20,000 and the annual depreciation value is 20%. You will only need to pay $333 each month for a 3-year lease. The same car can have a monthly payment of up to $610 a month for the same period under a car loan financing. But if you have a more positive cash flow each month, then buying a car can be very favorable.
Your Driving Behavior
If you’re someone who likes to drive very often, then renting can be problematic. All lease contracts have a mileage agreement under which you need to abide. If you go over the agreed mileage for the whole period, you are required to pay extra. Extra payments for these are counted per excess mile. Some car rental companies may charge you an extra $20 per excess mileage. So, let’s say you drove 10,00 miles over you agreed on mileage, that’s an extra $2000 payment.
Rental companies also account for the car’s wear and tear. If you aren’t a careful driver, then you may need to pay more. If you have a bad driving behavior, then buying your own car makes more sense.
How Long You Need The Car For
You need to really think about how long you’ll be needing the car for. If it’s only for a few years, then renting a car is the best option. Additionally, you need to make sure that you can keep paying until the term is up. People who try to get out their lease can pay up to 5-months worth of extra payments.