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Leasing vs Buying a Used Car – Which is Better?

January 16, 2024 • 2607 views

When buying or leasing a used car, coming to a decision can be overwhelming. That’s why it is important to take a step back, consider the pros and cons of buying or leasing a used car, and get clarity on how to buy or lease a used car. This blog helps you make the right decision for you. Read on!

Leasing a Car - How Does It Work?

After the COVID-19 pandemic, many automobile businesses have provided a facility for leasing their cars in India. As a result, many are interested in leasing a car to meet their short-term driving needs.  From a car lease service provider, you can choose a car based on your preferences and drive it for a limited period.

A leasing firm will provide you with their fully owned cars in exchange for monthly rentals as decided. In such a case, you need not pay the other charges such as maintenance costs. Your eligibility for leasing a car depends on your age and income status.

After your lease period ends, you will have to return that car. However, you can also choose to take over the ownership of the car by paying a specified amount.

Here are the advantages of leasing a car over buying one:

  • You can drive a new car every few years by returning the lease and leasing a new car.
  • Leasing has lower monthly payments than financing a car with a loan.
  • You are responsible for paying the depreciation of the car during the term of the lease.

On the flipside, there are a few cons of leasing a car over buying are:

  • Since you do not have ownership rights, you cannot change or modify the car.
  • After your lease period, you need to return the car and start over this process.
  • There are often constraints associated with the mileage limits and you will be penalised to exceed this limit.

You can also consider buying a used car to have complete ownership of your vehicle. To cover the costs you can easily turn to a Pre-owned Car Loan.

Also Read - Factors to consider while taking a Pre-Owned Car Loan

Used Car Loan - How Does It Work?

If you are considering buying a used car, you can avail of a used car loan and repay in affordable instalments. However, your EMI depends on the loan amount, repayment tenure and the rate of interest that financial institutions offer. Your eligibility is also based on factors such as credit score, job profile, monthly income, and age. The benefits of purchasing a second-hand automobile are:

  • Complete ownership of the car
  • No limits on mileage and modifications
  • Used cars are cheaper than new cars

On that note, let’s look at the key differences between leasing a car and a used car loan in the next section.

Car Lease Vs Used Car Loan

Understand the key differences between leasing a car vs buying a used car by going through the following table:

Feature

Used Car Loan

Car Lease

Mileage Limit

There is no mileage limit for purchased cars.

The leasing company will specify a note on the mileage where any extra consumption is chargeable.

Tax Benefits

No tax benefits present.

A tax benefit of up to 30% is present.

Down Payments

You need to make down payments to purchase a car.

No down payments needed.

EMIs

The cost of your vehicle is divided into EMIs of different tenures.

There are no EMIs present. You will just have to pay the rent.

Adding Car Accessories

You can add accessories due to ownership rights.

You cannot add any accessory without the consent of your leasing company.

Ownership

You do not need to pay any extra amount to gain ownership.

You will be asked to pay a specific amount to transfer the ownership to you.

Guarantor

A guarantor is usually required to avail a loan.

Usually, no guarantor is required.

Returning

You will gain complete ownership of the car after your loan period.

The car must be returned before your lease tenure's due date/time.

 

Should You Lease a Car or Buy a Used Car with a Loan?

You can decide whether to compare the net advantages and disadvantages associated with both cases. Then based on your budget and goals, you may either go for a car lease or buy a second-hand car.

For instance, in case you prefer changing cars and trying out driving different cars, you can prefer leasing cars. However, if you consider owning and modifying a car, you may want to buy a used car.

How to Apply for a Used Car Loan?

The steps to apply for a Pre-owned Car Loan are as follows:

Step 1: Click on the ‘Apply Now’ button to open the application form.

Step 2: Fill out the application form and upload the necessary documents.

Step 3: Finally, click the ‘Submit’ button.

Also Read - Loan For Used Cars: Here’s How You Can Get it Easily

To Conclude

Buying a used car or leasing a car depends on your specific needs and financial planning. While leasing a car has its benefits, buying a second-hand car with a Pre-owned Car Loan is an affordable solution that gives you the freedom to use it as long as you. With Poonawalla Fincorp now you can get a used car loan with minimal documentation, simple eligibility criteria and quick approval. What are you waiting for? Drive home your dream car today!

Apply today for a loan and become a proud owner of your favourite car!

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Pre-Owned Car Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

We are a team of expert writers and editors passionate about providing our readers with authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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