Why Lease a Car over Buying a Car?

Car is a valuable possession and everyone desires to own a car some day or the other.

Well, having a Car would not have been a major issue if it had not been related and concerned with the total cost of a car. Most of the times, having a car is a costly affair. Besides considering which car you should have for yourself and family, you invariably have to take into account the cost of the car. So having a car turns out to be more of a financial decision.

In this context, you have some options at your disposal.

You can buy a car, take a car loan, or else lease a car.

As a matter of fact, leasing a car has become quite popular with people from all across the world. There are distinct advantages in having a car on lease when compared to other options. Outright buying a car requires you to have the money equaling the cost of the car which is not feasible for most of the people. Taking a car loan also turns out to be an expensive affair as you have to pay the price plus interest added on it.

Why Lease a Car over Buying a Car?

When compared to other options, leasing a car seems a much sensible decision. In fact, Car Lease accounts for 20% of all new car transactions. In car leasing, the dealer has to sell a car to a leasing company. Also, you are required to return the car to the leasing company when the lease term ends.

Let’s have a look at the various benefits of leasing a car.

You require less of upfront cash: This is one of the major benefits of leasing a car. Well, in the first place, lease requires less of upfront cash. This means that, with a lease, you require to make a small amount of down payment. In some cases, there can be a no down payment scenario, as well. So the initial cash you have to hold is less for getting a new car. This is beneficial for cash-strapped people who wish to possess a car. Also, you can free up your cash for other uses, as well.

Need to pay less monthly payments: By having a car on lease, you can reduce your monthly payments that you pay towards your car. In fact when compared to a typical car loan, the monthly payments in a car lease, are almost 30% less, which amounts to a considerable saving. In car lease, you are required to pay only for that portion which you use, so the monthly installments get slashed down.

Lower amount of Sales Tax: In car lease you have to pay the sales tax based on the monthly installments rather than on the actual value of the car. So the amount of sales tax gets reduced by a considerable value and thus reduces your overall payment burden.

Cost of Maintenance is Low: Most of the time lease term equals the length of the manufacturer’s warranty. So your vehicle is always covered under manufacturer’s warranty and thus the maintenance cost is considerably reduced. You actually save on the maintenance of your vehicle.

No headache of selling a used car: In a car lease agreement, you don’t need to take the pains of selling a used car. When the lease agreement on your car expires, you simply have to return the car to the leasing company and so have to make no efforts in selling them.


So you see that the concept of leasing a car is a excellent option when you wish to have a car.

Though there might be few limitations of leasing a car such as limited agreement period, limit to distance travelled during the lease term, liability for payments, cannot claim the car as an asset, and few others; still leasing offers many advantages (as we have already seen above).

You just need to negotiate the best car lease deal with the leasing company so that the contract of the lease is viable and cost effective to you from a financial perspective.

Share on:


TradingView is the top stock charting software available for FREE.

Get Now


Top Stock Broker in India. Open Free Demat and Trading Account.

Get Now
Scroll to Top