Renting or Leasing a Car: What is the Difference?

renting or leasing a car
Photo: Collected

In recent years, people have become more interested in renting or leasing. And it’s because these two ways to pay for a car have many benefits for people who aren’t sure if they want to buy one. Both formulas are very similar and can make it hard to tell them apart, so we’ll explain what each one is made of and what the main differences are.

What is renting?

One of the most talked about and sought-after ways to rent is to rent a car for a long time through a contract that usually lasts between 3 and 5 years. By paying a monthly fee to a leasing company, a person, business, or self-employed person can get a new car with all the benefits of owning one, but without all the responsibilities and costs. This is because the renting company pays for maintenance, repairs, insurance, taxes, and other services. People who want to use a rental car only have to pay the monthly fee and gas or energy if it is an electrified car.

Once the contract between the two parties is over, the customer can either return the car or sign a new one, which will renew the model and bring it up to date again. Also, even though it’s not in the contract, if the customer wants to buy the car, they can do so by paying the car’s residual value.

What is leasing?

Long-term car rental is also a part of leasing, but you always have the option to buy the car at the end of the contract. In other words, it means making a financial lease agreement with a bank so that the user (usually a self-employed person or a business) can get a car without having to make a big down payment. Before the customer can become the owner of the car, they must pay an entry fee and a fixed monthly fee. It’s important to know that the monthly fixed fee goes down as the entry fee goes up. Also, unlike renting, the person who leases a car is responsible for all the costs that come with owning a car (maintenance, breakdowns, insurance, taxes, etc).

What makes renting and leasing different?

The main differences between renting and leasing are as follows:

Which is better: renting or leasing?

Since both formulas have different pros and cons, it’s hard to say which one is better. As with everything else in life, the decision between renting and leasing will depend on each person’s situation and needs.

But if you don’t like taking risks, renting is your best bet because you can cancel and sign up again at any time. Plus, you can change the model every so often and always be up-to-date with models that have the latest technology.

On the other hand, if you want to pay off a car over a long time (more than ten years), leasing makes the most sense. This is the best way to get a car if you want to own one.

Lastly, if you don’t want to spend a lot of money or don’t have much capital, renting is the best option because you won’t have to pay for repairs, insurance, etc.