When we think about changing our car, the most common thing is to assume that we are going to own it, and in many cases financing its purchase. However, this thinking has changed over the years, especially after the arrival of renting and leasing, which are increasingly popular as alternatives to traditional financing.
Before talking to you about the characteristics of each one so that you can know which is the best option for you, it is important to know that renting and leasing are only available for the purchase of new vehicles, so, if you are thinking of buying a New second-hand car, you will have no choice but to go to traditional financing.
Starting with the latter, we remember that we consist of requesting a loan from a financial company or from the dealership itself for the purchase of the vehicle, which may be partial or total. Like, you take the car and pay for it in monthly user fees with an agreed interest, plus you will have to face all the expenses associated with its maintenance. Its main advantage is that you own the car and have freedom in choosing a workshop or insurance.
What are ‘renting’ and ‘leasing’?
Beyond traditional financing, you can change your car through renting, which is a way of renting a vehicle on a medium-term basis, so it is aimed at a very specific audience. This means that the car is always the property of the company or dealership that rents it to you, and you, as the user, have the right to enjoy it.
To enjoy this rental, you will pay a fixed monthly fee, with no initial outlay required, and in which vehicle inspections, comprehensive insurance, tire changes and maintenance or breakdown expenses are included.
Since we are talking about long-term rentals (usually four years), it can be a good option if you drive many kilometers per year (up to 100,000 km), if you change cars frequently or if you are interested in a model on sale. In addition, you can try different vehicles without taking too many risks and change them as your needs change.
The drawbacks are that the car is not yours and that the installments are usually higher than financing, in addition to the fact that an annual mileage limit must be set and that the catalog of vehicles to choose from is limited.
For its part, leasing is a mix of the previous two, since under this financing you pay to use the car for a period of time, but there is the possibility of purchasing it at the end of the leasing period. Generally, the rental has a duration of between two and four years in which a fixed fee is paid.
Once the rental period has ended, three options are offered: renew the lease with another vehicle, keep the car by paying a final installment, or return the vehicle and end the leasing contract. In this way, we find a rental with purchase option.
As for its main advantages, there is no initial outlay to pay and you pay less than renting, without clauses that limit mileage and with the possibility of deciding on the vehicle once the lease has ended. For all these reasons, it is an ideal option for those who use the car often and are afraid of choosing the wrong model or are not sure which model they like, as they can search for a different one at the end of the rental. In addition, the fees can be deducted in the Income Tax return.
However, it also has some drawbacks, the main one being that you pay more money monthly than with renting, and that insurance and maintenance costs are not included in the installments, as is the case with renting.
Therefore, choosing one option or another will only depend on the preferences of each driver.
