Buying and Leasing a car is situational for everybody’s situation.

Here we will guide you towards the buying and leasing a car with comparisons, pros and cons and the explanation for both buying and leasing a vehicle. 

Buying a car means you do the full payment of the car or you go with the finance of your car which is for a minimum of 12 months to a maximum of 60 months in India and varies from country to country. When you buy a car you get the ownership of the vehicle.

Car leasing can be done by an individual which is a process for a predetermined period in exchange for timely payment of rentals. Nowadays it is also getting common to lease a car which many people do. Some people prefer leasing over buying a car so that they can get a new car every two or three years, Here, the individual who chooses to lease a car does not get the ownership of the car. Once the period for the lease is over, the car is supposed to be returned to the owner of the asset which is the car in the case. If you think buying a new car is expensive, you may consider leasing it for a specific time. In such cases, you pay only for the time of what you use the vehicle and diminish the impact of maintenance and depreciation costs. The young working population is not keen on parting ways with their savings for a down payment of a car. They don’t self efface from EMIs but don’t want to be tied down with ownership. Leasing model satisfies all their needs as it is more viable and feasible for this young population.


OwnershipYou own the vehicle and get to keep it as long as you want it to be one year or forever.  You don’t own the vehicle. You get to use it but must return it to the ownership at the end of the lease.
Up-Front CostsThey include a payment in case/bank or a down payment, taxes, registration, and other fees.They can include the first month’s payment, a refundable security deposit, a down payment, taxes, registration, and other fees.
Monthly PaymentsLoan payments are usually higher as compared to lease payments because you’re paying off the entire purchase of the vehicle, interest and other finance charges, taxes, and fees.Lease payments are always less than loan payments as you are paying only for the vehicle’s depreciation during the lease-end term.
Early TerminationYou can sell or get a new vehicle it is all up to you as you are the owner of itIf you end the lease early and would want to end the lease before the end it might not be hassle-free and could make you pay a penalty or the entire amount till the lease term.
Vehicle ReturnIt is all up to your choice of when you want to sell or get a new vehicle You return the vehicle at lease-end to the ownership of the asset.
Future ValueThe vehicle will depreciate, but its cash value is yours to use as you like the owner.On the plus side, its future value doesn’t affect you financially as you are not the owner. On the flip side, you don’t have any equity or the ownership in the vehicle but are good for your pockets.
MileageYou’re free to drive as many kilometres as you want. Most leases limit the number of miles you may drive as it is in the contract, often 12,000 to 15,000 per year. (You can always negotiate a higher mileage limit as per you requirment.) You’ll have to pay charges for exceeding your limits.
Excessive Wear and TearYou don’t have to worry about wear and tear, but it could lower the vehicle’s trade-in or resale value.Most leases hold you accountable. You’ll have to pay extra charges for exceeding what is considered normal wear and tear.
End of TermAt the end of the loan term, you have no further payments and you have built a credit score to finance your next vehicle.At the end of the lease term, you can go for another vehicle of your choice be it the latest model or any other which you were looking for 
CustomizingThe vehicle is yours and you are the owner of it, to modify or customize as you like, although there is a certain limit to as it may void your warranty.Because you must return the vehicle to the owner of the asset in good condition, If there is any excess damage, you will have to get it repaired or could get insurance claimed.

The Bottom Line

Choosing whether to buy or lease a car is serious financial decisionmaking. Testing terms, compare payments and calculate how much you’ll pay in each structure over the short as well as long term.  Always remember Negotiation is always necessary, whether you decide to buy or lease a vehicle. It would come down to how you can crack a deal to satisfy yourself and to your pockets.

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