Buying vs. Leasing a Car
Those having limited financial resources often have to choose between buying a car and taking it on lease. The associated tax benefits attract many businessmen to buy the car on lease. Those who have sufficient money prefer to buy the car. For those who are still confused about whether to buy the car or take it on lease, consider the following.
The merits and demerits of buying the car areas follows-
· The car will be your, thus you can do with it what you want. You can customize the car as you see fit.
· There are special loans available with some lenders geared toward car buyers. Usually these loans are at a special rate. You can repay the amount involved in the purchase of the car by paying the sum within 36-48 months.
· Not the discount alone, most of the car dealers are now offering huge discount to attract sales that was actually taken away by the economic recession.
· The rate of depreciation for the new car will be around 30% for the first 5-6 years. If you deduct the depreciation amount from the amount of the loan, you will have to pay much less than the actual amount.
The merits and demerits of leasing a car are as follows-
· Many countries do not tax the entire value of cars taken on lease. Tax is charged on the amount due to the lessee. Business corporate can also avail of tax benefits if the leased car is used for business.
· No down payment is involved in a lease. The monthly payments are reduced if the lease is for a short duration.
· Some lease agreements have mileage restriction attached to them.
· Also when you lease a car the agreement may stipulate that the car must be well kept, or use only a certain type of diesel.
Another option for those who cannot afford the monthly loan payments is the purchase of a used car.