Rent vs car purchase: what is the best choice?
After the mortgage or rent, the car often occupies a large part of the monthly budget. Once your model is chosen, is it wiser to rent or buy? From a financial point of view, as the two options have their advantages and disadvantages, here are some points to consider when thinking about them.
The advantages of buying a car
Better long-term value
Once a vehicle is fully paid, all you have to do is pay for gas, maintenance, and repairs. Finished, monthly payments! The longer you keep your car, the more you will enjoy years with more cash on your budget.
The vehicle belongs to you
Even if it is linked to a car loan, a vehicle purchased is true “yours”. In the event of a change in your financial situation, you would be free to sell it, pay off your debt and turn to a more modest model. As an owner, you can drive as many miles as you like and are not subject to the manufacturer’s requirements. Lax car rental no one car rental service.
Pay no interest
If you have sufficient cash, buying a cash vehicle saves you all the interest – you only pay for the vehicle as such. It can be an interesting solution for buying a used car at a low price; below a certain amount, institutions often require very high-interest rates. Exotic car rental also provides some best services.
The disadvantages of buying a car
The cost of depreciation
After five years, a new vehicle will have lost 60% of its value, including 30% in the first year! As the repayment is not done so quickly, if an unexpected requires you to sell your vehicle in the early years, you may get less money in return than the balance of your loan. The longer the car is kept, the less the impact of the depreciation.
The advantages of car rental
Smaller monthly payments
By renting a vehicle, you only pay for the value that it will lose during the term of the lease, its depreciation. This amount is divided into a number of monthly payments (usually between 24 and 48). At the end of the lease, the vehicle no longer belongs to you: you do not have to pay for its residual value. As a result, smaller monthly payments free up cash for other expenses.
Drive new … more often!
If it’s important for you to always be driving a newer model, the rental is better suited to your lifestyle. By chaining short-term contracts, you will have the freedom to replace your vehicle with a new one on a regular basis, maintaining similar monthly payments.
Less unexpected expenses
Generally, the most important mechanical parts of a rented vehicle are protected by the manufacturer’s warranty. While no driver is completely immune to bad luck, in general, maintenance and repair costs should be limited to those related to routine appointments and tire changes over time. of the lease.
The disadvantages of car rental
The depreciation calculation is based on a precise mileage allowance. For example, 18,000 km a year. If the meter exceeds this limit when your lease ends, the vehicle will have lost more value than expected and you will have to pay the difference. To avoid penalties for excess mileage, make sure you choose a sufficient allowance for your needs right from the start.