The new year is almost upon us, and you have decided that it is the right time to get a new car or bike. Well, an excellent decision undoubtedly, but what are you waiting for? Are you confused between whether to buy a car/bike or lease it?

Whether you want a hot new sports bike, an SUV with the latest safety features, or a fun convertible, you will have to make a major choice – to lease or to buy. Now, there are pros and cons to both buying and leasing. However, in order to correctly evaluate those pros and cons, you need to understand the major differences between leasing and buying.

So, here are the ten differences between buying and leasing a car or bike. Read on to decide whether you want to drive off in a leased or purchased vehicle.

1. The Rights of Ownership

Ownership is the prime difference between leasing and buying a car or bike using a car loan. When you purchase your car or bike, you are the owner of the vehicle, and you can keep that for as long as you want. On the other hand, while leasing the car, you are basically renting that on a long-term basis from a dealership for a particular time period. 

2. Upfront Costs

When you plan to buy a vehicle, you will need to invest some money right away. Usually, you need to put down ten percent to enjoy the best financing rates. Now, leasing needs less money upfront, and even no money at all in some cases. Leasing will get you some additional flexibility if the cash flow is not going smooth.

3. Monthly Payment

Many of the customers lease a vehicle as the monthly payments are thirty percent (approx.) lower than buying a vehicle. Though you can opt to take car or two wheeler loans for making the purchase.

4. Duration of Ownership

Though the term ‘ownership’ is being used a bit loosely in this context, it means the time for which you have the vehicle in your possession. After purchasing the vehicle, you can choose to keep that for one year or you can have it until those wheels fall off.

On the other hand, the lease is for a particular and precise time period, which is typically around two to three years. When you return your vehicle early, you might need to pay early return penalties. Thus, the time of ownership refers to a particular duration.

5. Vehicle Sale or Return

After you purchase any vehicle, it is up to you to decide how you want to use it. When you are ready to say goodbye to your vehicle, you can sell that on your own or use that as a trade-in. This tends to be a lot easier in case of a lease.

You simply need to drive the car or bike back to that dealership, give them your keys, and that’s it. Of course, when you hand over the keys, you will not be any richer, unlike the case of selling your car.
6. Subsequent or Future Value

You must have heard the age-old adage - ‘purchase appreciating assets and lease depreciating assets.’ If you are still not sure about what it means, here’s breaking it down.

The idea is that only the things that raise their value over time, such as houses, have to be bought. As such, you are making an investment where you can potentially make major profits in future. Cars and bikes tend to lose value in time. So, you need to lease the vehicle because you will never make money back on that.

7. Mileage

As a part of the leasing agreement, there is a mileage limit set on the vehicle. Typically, this mileage limit is set between 10,000 and 15,000 per year. The dealership will charge you an overage fee if the mileage is not below or at the agreed upon limit while returning the vehicle after the completion of the lease.

If you plan to have a long drive or commute as a part of your work, or take frequent long road trips, keep the mileage limit in mind when buying or leasing. On the other hand, buying the vehicle means you can drive it as long and far or as little as you want.

8. End of Term

Whether you lease the car/bike or finance the purchase with a loan or your own funds, the options come with a particular time period to make the payments. A good thing about making a purchase is that beyond the funds required to pay off the vehicle there aren’t restrictions or dues liable on your using it.

This is one of the downsides of that future or subsequent value argument. While you tend to have extra funds in hand every month leasing a vehicle never brings you that sense of ownership. Not to mention you must make payments till it is time to give the vehicle back.

9. Customization

For most of the lease agreements, the car has to be returned in a condition matching its original delivery when you return it. So, you might like twenty-inch rims or add a good short-shifter to your leased car, but that has to come off before you return the car. But if you purchase the vehicle, you can choose to add any bling you feel like, without thinking of taking that off before you sell the car.

10. Wear and Tear or Maintenance

Leasing might not be a good idea if you are someone who is quite rough on the cars. Remember that leasing is nothing less than a kind of long-term rental. The dealership will turn it around later and try to sell it. You will need to pay more if you return the vehicle back in bad condition.
What is The Right Choice – Buying or Leasing?

To be perfectly honest, the decision between buying and leasing depends upon personal preferences and financial situation. For instance, you might want to buy a car to enjoy the freedom of ownership. On the other hand, someone else might choose to lease one because it means spending less money upfront. So, evaluate the pros and cons based on your present condition.

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