Buying a car: taking out a loan or leasing?

This article is about taking out a loan to buy a car and leasing a car. The advantages and disadvantages of the two options are highlighted.

Take out a car loan: Advantages and disadvantages

With a Car loan you borrow money from a financial institution. You then use this money to buy the car. This means that you own the car outright. Only the loan must be paid off in installments to the financial institution. Before the Credit application it is helpful to compare offers from several loan providers.

Advantages

Anyone who buys a car with a loan is directly from that moment the Owner of the vehicle. This gives you complete freedom of choice in terms of insurance, workshop and use. Because you actually own the car, you also have the freedom to sell it again. Even at the time of purchase, you can often make price Advantages get, because you pay for the car directly and in cash. After that, one is only responsible for the repayment of the loan. Here you can secure tax advantages.

Disadvantages

With the car loan can be Interest have a higher effect than in the case of a leasing contract. However, this is not really a disadvantage because these can be fully deducted from taxes again.

Car leasing: advantages and disadvantages

At Leasing the car does not belong to you, but to the company from which it is leased. So it is more or less a Rental objectfor which one pays a monthly fee. The fee and the term are specified in the leasing contract. Leasing companies often advertise with attractive and uncomplicated-looking offers. However, leasing often involves a lot of Paperwork behind it. Extensive rules and obligations can quickly limit the pleasure of driving a leased car.

Advantages

Leasing gives you the opportunity to use the latest Car models to drive at a favorable monthly price. At the end of the agreed term, the car is returned and you do not have to worry about it any further. Alternatively, the car can be purchased at an agreed price.

Disadvantages

You don't really own the leased car. Nevertheless, you have to take care of maintenance during the leasing period. Leasing companies usually require that you take out comprehensive insurance. This is more expensive for leased vehicles in many cases. Often in the Leasing contract also stipulates how many kilometers may be driven per year and which workshops must be used for repairs. There are tax advantages with leasing only for companies, but not for private individuals. At the end of a leasing contract, additional costs may be incurred if the leasing company is dissatisfied with the condition of the vehicle. Also, if the mileage is too high, additional demands can be made. Incidentally, the buyout of the car at the end of the term is not infrequently very high, which is why financing through a personal loan may make more sense.

Conclusion

Anyone who wants to buy a car is faced with the Decisionhow the purchase is to be financed. Many people depend on a car for their professional and private lives. Nevertheless, not everyone is able to pay for a big purchase like a car just like that. Two options for a new car are a loan to buy a car and leasing a car. Both options have Advantages and disadvantagesthat you have to keep in mind. Leasing is only cheap at first glance and you don't really own the car. If you take into account the total cost and the potential savings, a personal loan is almost always cheaper than leasing. In addition, a leasing contract comes with many conditions and rules that limit one's freedom. With a car loan, you have to look for the most favorable provider. In return, one is directly the proud owner of a new Cars and can freely decide how to use it.