Things to Consider Before Buying or Leasing a Car

In today’s world, almost everyone wishes to drive in a car. But it’s not affordable for all because of the high prices, especially when it comes to luxury cars. But this doesn’t stop people from driving as they can opt for lease hire cars.

What is leasing?

Leasing in simple terms can be described as you have to pay only that much amount to the vehicle leasing company for the period in which you have actually used the car as a contrast to paying for the entire vehicle cost when you buy the vehicle.

In recent years, leasing has become a favorite alternative for many. Though the advantages of contract hire and leasing are numerous, it is important to consider the following factors before deciding to lease a car:

1. Vehicle usage period

If a person intends to keep the same car for a longer period of time, then purchasing is a better option, and if a person likes to roam in new cars every 3-4 years, then leasing is definitely a cost-effective option.

2. What’s the need

Large companies requiring a fleet of vehicles should opt for leasing in order to avoid the hassle involved in maintaining so many vehicles. Fleet management companies offer a range of services like car maintenance service, accident, and claim management, breakdown assistance, insurance, etc. which will help the owner of the car concentrate on core business car leasing. Also, some companies provide the option to buy back the car at the end of the lease term at the prevailing market price.

3. Financial Scenario

Everyone needs to adjust his budget according to the present volatile economy. In such a scenario, car leasing in India can prove to be a smart choice wherein you enjoy the ride in the latest model after every few years when the lease is up.

4. Driving habits

Many leasing companies want back the vehicle in proper condition. So people who are rough with their driving habits must think properly before making any decision or else they might have to pay extra fees.

Tax implications

The major advantage is that lease rentals are treated as operating expenses over the lease term, and thus, it doesn’t affect your cash flow.

Lower sales tax for the lessee as he is not paying tax for the entire purchase price.

For self-employed, lease rental is treated as an expense.

For salaried, there are tax benefits on car lease rental.

On a like-for-like car, the monthly lease rental works out to be cheaper than EMIs on a car loan

Leasing a car vis-a-vis buying one solely depends on individual mindset and needs. This could be one of the most important decisions that can affect your bottom-line, be wise, and choose a reputed leasing company.