Wednesday, May 1, 2019

Is it better to buy or rent a new car?

Is it better to buy or rent a new car?          

Is it better to buy or rent a new car?
Is it better to buy or rent a new car? 

The situation has changed considerably and nowadays all major car manufacturers are actively promoting the idea of renting a vehicle, making it a viable option for individuals, rather than buying a car.

Renting a car should be considered a long-term rental. Many people like the idea of renting their car, simply because it allows them to have one in a way that they otherwise would not be able to afford.

The obvious disadvantage of renting a car is that you do not have the title of the vehicle. In practical terms, this means that you cannot really make many modifications to the vehicle, and you must return it at the end of the rental period.

The decision to purchase or lease a vehicle is specifically based on the above distinction. For many, the idea of leasing has a number of advantages that outweigh the issue of vehicle ownership or title.

A car rental contract is a fixed long-term contract, normally for a period of up to 72 months. There is a fixed monthly repayment cost, based largely on the depreciation in the value of the vehicle over the term of the lease.

There will be other conditions such as a fixed mileage allowance for the duration of the lease and possibly on an annual basis.

There is normally an option to purchase additional kilometers, the costs of which should be specified in the terms and conditions of the lease.

In addition to having access to a vehicle that the individual may not be able to own, there are also significant financial benefits to be obtained by renting a car. Many manufacturers offer very specific financing contracts on car rental contracts, often with an interest rate of 0%, assuming that your credit rating is sufficient to qualify.

With any lease agreement, all costs must be detailed and clarified at the beginning of the lease period. This includes what is normally referred to as the end-of-lease contract. These are the costs associated with vehicle wear and tear.

The manufacturer's intention is to put the vehicle in a condition that is appropriate for its age and mileage. If the vehicle shows excessive wear and tear beyond what is deemed appropriate, a fee will be charged to the lessee to cover the difference.

These costs may be significant, but the lease must specify in detail how they are calculated and on what basis the costs will be charged.

Whether it is for the purchase or lease of a vehicle, the same credit checks are performed on a person and an assessment is made based on their credit score. This will determine whether the credit company or concession financing will lend money to the individual and on what basis.

This will affect the decision itself, the duration or duration of the loan agreement, the interest rate applied to the duration of the loan and the amount of the down payment.

The choice to buy or rent is not really a financial choice, although renting is normally a much cheaper option. The real decision is more emotional, where each individual gains in advantages and disadvantages of ownership and associated costs, as opposed to a form of borrowing that, after a few years, requires its return.

Peter Main is a freelance writer with extensive writing experience in the automotive industry and automotive financing in particular. Particular emphasis is placed on impaired loans and the number of large dealerships such as Hyundai Motor Finance and Kia Finance working to encourage people to apply for credit while buying or leasing their vehicles.

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