Often, the buyer is faced with a difficult question as to whether to buy a car or lease it. On the one hand, among the positive features of leasing, one can single out relatively lower investments. In addition, leasing allows you to drive a vehicle that people cannot buy due to its cost. On the other hand, the purchase requires a large monthly financial investment, but it can be considered as an asset of owning a car. Buying a car seems more relevant in today’s realities, as it meets people’s needs in the long term.
First of all, the convenience of buying is determined by such economic factors as supply and demand and inflation. During the period of the pandemic and a complete global lockdown, it led to higher inflation in all countries. This is explained by the suspension of business activity and a decrease in demand for fuel and energy and automotive resources (Torok 1035). As a result, prices for these goods have declined, as has demand from buyers. Thus, the loan has become a more affordable and convenient option. The customer makes monthly payments of a set amount, a down payment, pays the necessary expenses and taxes on the machine and ultimately, it remains with them. This is a major advantage over leasing, as by choosing this system, the driver undertakes to pay various fees, including taxes, registration and monthly payments. However, the car remains with the company unless the person decides to buy it back.
Other undeniable advantages are Mileage and Early Termination. Using their car, a person can drive as many miles as they need. This is not controlled in any way and ultimately only affects the maintenance of the machine and its price tag when reselling it (Huang et al. 14). At the same time, leasing is the conclusion of an agreement with a company where the amount of travel is clearly indicated. The agreement provides for a limit increase clause. However, this incurs additional costs. In this way. For long journeys and trips, buying a car wins over leasing.
In addition, mention should be made of the possibility of abandoning the machine. When owning a vehicle, a person can put it up for sale or exchange on their own terms at any convenient time. Thus, in case of financial need or if they want to buy a new car, they will be able to receive funds (Huang et al. 12). In contrast to these favorable conditions, leasing involves strict contractual conditions that protect the interests of the business owner. Early termination of the concluded conditions may be no less costly than full compliance with them. Thus, in the event of various circumstances, the client cannot immediately relinquish possession of the vehicle.
However, among the positive aspects of buying a car, one can single out a negative consequence that is inferior to leasing. It consists in the possibility of changing cars and owning a more expensive vehicle. Leasing does not oblige a person to buy a car, so they can choose it according to the technical specifications (Torok 1040). With a loan, the client must rely on the current financial condition and solvency in the coming years. Thus, the purchase requires more caution and accurate calculations.
In conclusion, it should be said that both buying and leasing have positive and negative sides. Leasing allows you not to pay the full cost of the car and change it to another at the end of the contract. However, the purchase implies more mobility and convenience for the customer. Payments in this case may exceed the terms of the lease, but in the end the car remains with the person. In addition, buyers don’t have to worry about the number of miles driven and the terms of the contract with the company.
Works Cited
Huang, Youlin, Qian, Lixian, Soopramanien, Didier and David Tyfield. “Buy, lease, or share? Consumer preferences for innovative business models in the market for electric vehicles.” Technological Forecasting and Social Change, vol. 166, 2021. pp. 1-18. Web.
Torok, Laszlo. “The link between car sales and the economic crisis in the European Union at the time of the Covid-19 epidemic.” International Journal of Economics and Business Administration, vol. 3, no. 4, 2020. pp. 1033-1042