Which is better: leasing or buying a used car?

Buying a new vehicle is one of the most exciting milestones for an individual. However, before you splurge your money, it is wise to decide whether you should buy or lease a car according to your requirements.

To decide on the best option for you, it is crucial to analyse the various dimensions involved in the car-buying or leasing process.

Should you buy a new or used car?
Does your car determine your status symbol?
How much would it cost?
How many miles can it cover?
What is the purpose of your purchase (business/practical)?

To help you with your decision, we discuss some important aspects of leasing vs. buying a car.

What Does Leasing a Car Mean?

Leasing a car involves a contract between two parties, where one party permits the other to use the car for a specified period in exchange for fixed monthly or periodic instalments. These instalments include insurance charges as well. The lock-in period ranges from a minimum of 2 years to a maximum of 5 years.

It is a good option when you:

Want to drive a car that you can’t afford to buy.
Do not intend to own a car.
Are looking for more affordable solutions.
Love to switch brands every few years.

Leasing is frequently confused with hire-purchasing. Let us understand the key differences between leasing and hire purchasing.

Hire Purchase vs. Leasing

Key differences	Hire-Purchase	Leasing
Customization	Yes (but only after full repayment of the lease amount).	Not possible.
Prepayment	Deposit payment in cash or trade-in of an existing vehicle, or both.	Yes (for the rental period).
Ultimate Ownership	With the hirer.	With the leasing company.
Responsibility of Maintenance	On the hirer.	On the lessee.
Delay in the Monthly Payment	Risk of repossession of assets as per the contract terms.	Risk of repossession.

Pros and Cons of Leasing a Car

Pros

Leasing a car comes with benefits, such as:

You get the experience of having a new car.
It is pocket-friendly since you only have to pay for the period of usage.
You do not have to worry about being charged depreciation on a car.
Flexibility to upgrade your model within a few years.

Cons

Leasing a car can also be challenging for various reasons, such as:

Extra cost for extra miles covered because of restriction of annual mileage cover in leasing.
Penalty to be paid for any wear and tear during the leasing tenure.
Customization is not possible in a leased car.

Buying a Used Car

Buying a new car allows you to be the legal owner and have complete possession.

However, buying a brand new car might cost you more than hiring or leasing. If you wish to buy an affordable new car, you should consider alternatives like pre-owned vehicles and used cars. These options allow you to become a car owner at pocket-friendly prices. Car dealership places such as Auto Best Emporio let you purchase pre-owned luxury cars such as BMW, Audi, Bentley, Ferrari, and many more, at prices starting at just Rs. 10 Lakhs.

Used Car - Pros and Cons

Pros

Buying a used car offers many benefits, from low cost to customization flexibility. Some important examples are:

A used car is more affordable compared to a new car.
The buyer becomes the legal owner of the car after the full settlement of payments.
No restrictions on the extra miles covered.
Freedom to keep the car or to resell it to others after full settlement of dues.

Cons

Though buying a used car is economical when compared to buying a new car, some important points need to be considered:

Used cars require a huge amount of down payment to purchase.
Increased responsibility for the repair and maintenance of cars.
There is little to no warranty on used cars.
Possibility of outdated machinery and parts in cars.

Leasing vs. Buying a car

Now, the biggest question arises ‘Is it better to lease or buy a car?’. To resolve this dilemma, let us compare the two on some important grounds.

Leasing vs. Buying a Car

Key differences	Lease a car	Buy a car
Monthly payments	Lower costs.	Higher costs.
Ownership at the end	With the leasing company.	With the buyer.
Warranty protection	Better in the case of leasing.	Involves post-warranty protection.
Time duration	2 - 5 years	Till the owner wants to keep possession.

Leasing vs. Buying Car Calculator

The choice of leasing or buying a car depends on your individual needs. The leasing vs. buying car calculator is an online tool that helps you compare the costs of leasing or buying a vehicle side-by-side and reach a cost-effective conclusion.

How to Use the Calculator?

Step 1: Enter the accurate values in the fields provided.
Step 2: Click on the calculate option.
Step 3: Get auto-generated results showing the costs associated with leasing and buying a car parallelly.

Determining your budget, cost-effectiveness, driving habits, and long-term plans will help you choose the most suitable option.