![]() But if you are purchasing the car for long-term usage and want to have the feeling of ownership, buying the car with the car loan makes more sense. If you are looking for a car for the short-term or switching cars within a year or two, leasing a vehicle is an ideal option. Should you lease a car or buy it on a car loan? The answer to this question depends on your requirement. Should you lease a car or buy it on a car loan? You can add accessories as per your wish. You may have to check with the car leasing company before you fit any accessories. You need not pay any extra amount to own the car at the end of the loan period. You have to pay the amount specified by the leasing firm if you wish to own the car after the end of the lease agreement. You will be the owner of the car at the end of loan tenure. You can return the car at the end of lease tenure. Additional distance driven will be charged. The leasing company will set a mileage limit. You pay the portion of the price of the car. You pay the cost of usage of the car and for other miscellaneous expenses. Since we have discussed car lease and car loan, let’s look at some of the differences between leasing a car and buying a vehicle on a loan. Difference between leasing and financing a car Lastly, your car loan eligibility depends on various factors such as credit score, income, age, etc. EMI is calculated based on the interest charged by the bank/finance company. Therefore, if you fail to repay the loan, the bank/finance company can take ownership of the car.Īnother critical factor of a car loan is EMI (Equated Monthly Installment). The car you purchase acts as collateral for the car loan. But initially, you have to pay the down payment. It is a financial product that lets you pay the price of the vehicle in easy instalments. You need not worry about car maintenance and other costs as the leasing firm owns the vehicle.Ĭan switch cars after the end of the lease agreement.Ī car loan is one of the most common and convenient financing options to buy a car. You can drive a car of your choice by paying a monthly rent set by the car leasing company. ![]() You need not pay a substantial down payment to lease a vehicle. That means you only need to pay the monthly rental to drive the vehicle of your choice. In layman's language, leasing a car is somewhat similar to renting an apartment. On top of that, you will have the satisfaction of buying your dream car. ![]() In other words, you can consider the repayment of a car loan (EMI) as an investment. But on the flip side, you legally own the car after the end of the loan tenure. On the other hand, applying for a loan and waiting for the approval of the loan can be a tedious task. It can be an expensive affair if you're looking to lease a car for the long term. A car lease is ideal only for short-term usage. You have to return the car to the leasing firm at the end of the lease tenure. Moreover, you need not worry about car maintenance, car insurance, etc., as the leasing firm will take care of those things. It is because leasing a car is more straightforward than applying for a car loan. Car lease has gained popularity in the past few years.
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