Credit or leasing?

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Credit or leasing?

December 15, 2019 | Uncategorized | No Comments

vehicle loan

Financing a vehicle with a credit offers you the possibility of having the car of your choice and paying it for fixed monthly fees. This credit linked to the purchase of a car is an interesting alternative to leasing and can be an ideal and advantageous financing solution. This is valid for a new or used vehicle.

Many ignore how expensive leasing is. A private credit is slightly more advantageous, offering you a decisive advantage: the car belongs to you from the start – which is not the case with a lease.

Leasing a vehicle is very attractive: You do not need a large sum of money. But it is wrong to be deceived by the conditions of a lease that seem advantageous, the monthly fees for the lease are only part of the true costs.

 

The costs that we don’t see immediately

credit payment

  • Full insurance is mandatory. : When leasing you have an obligation to do so. You cannot switch to less expensive partial insurance for the duration of the lease. To top it off, insurance for a leased vehicle is more expensive than for a fully paid car (see the rubric: “Leasing is more expensive”).
  • The services must be carried out in a garage of the brand: the contract often provides for carrying out the service with a dealer of the brand. You cannot then go to a cheaper garage. The cost of services should not be estimated to be lower, as leasing companies order the vehicle’s maintenance conditions. Therefore, only the original parts cannot be used. Even when you have frequent problems you have to pay the lease, even when it is in the garage.
  • Expensive additional kilometers: As a general rule, maximum kilometers are fixed in the contract. This means that you must pay for each additional km made. If the km number estimate has been set too low, this will have important financial consequences when returning the car at the end of the contact.

 

What’s leasing disadvantage

What

Other disadvantages are not allowed to be difficult to calculate and can have enormous consequences. For example, the question of who owns the vehicle. During the time of the lease, the vehicle belongs to the leasing company and not the person who leased it. You cannot do what you want, especially to sell or lend to a person. As a general rule, the vehicle is delivered to the leasing company at the end of the contract. You have no legal right to purchase the vehicle if this aspect has not been agreed in the lease.

Going over the top, it will cost you dearly if you intend to terminate the lease prematurely. You stay aggregated for 3 to 5 years according to the contract. If you terminate the lease before the due date, you must bear the loss of the vehicle’s value. This means the amount of monthly lease payments is increased retroactively and you must immediately pay the full amount of the difference.

This in most cases represents an important amount. If the lease is terminated due to financial difficulties, this can lead to a boomerang effect. If you are unable to meet the monthly lease payments, you will be less able to afford early termination of a lease.

 

Reasons against leasing and in favor of other financing solutions

leasing and in favor of other financing solutions

otal purchase is undoubtedly the most advantageous option. If we cannot pay the full purchase price, we have to examine the credit variant. This can be more advantageous than leasing if you get an advantageous credit. One thing cannot be lost sight of: the vehicle does not belong to you at the end of the lease.

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