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by: sahil | last updated: March 15, 2010
Category: Lease vs. Buy | Tags: lease, car lease, advantages of leasing, vehicle leasing, car, vehicle, buying cars

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Vehicle leasing or car leasing is the lease of a vehicle for a short period of time and has some unique advantages compared to an outright purchase. The decision of leasing or buying a vehicle completely depends on the buying entity’s needs and attitude. For instance, a company can lease a vehicle or car for its employees and save money and can also prepare a fleet of vehicles due to lower payments and bulk lease orders. However, a person who is trying to make ends meet may not be a good candidate for leasing. Here are some apparent advantages of leasing compared to buying a vehicle.

Lower payments: For a buyer, lease payments usually are lower compared to payments on a car loan. This feature makes a lease a lucrative option for many people.

Flexibility: The flexibility with which a lessee can change cars is obviously not available when there is an outright purchase.

Income for the lessor: The vehicle that is leased generates income for the lessor even when the vehicle is under the ownership of the lessor. This obviously helps the lessor in maximization of profits.

The buyout option: A big advantage of leasing a car or any vehicle is that a buyout option may be available at the end of the lease. This means that the car can be bought by the lessee if he or she decides to keep the vehicle at the end of the contract.

Breaking a lease: A lease can be broken at any time the consumer wishes which is not the case with an outright purchase. However there may be penalties or fines if a lease is terminated prematurely.

Future value: A lessee or consumer does not have to worry about the future value of the vehicle whereas a buyer or an owner has to take the depreciation and the value of the car into consideration after the lease terminates.

Tax breaks: If a leased vehicle is used for business purposes, generally directly deduct the costs as business expenses such as monthly payments, insurance, mileage, and maintenance based on the percentage of business utilization as opposed to non-business use. The tangible benefits depend on the specifics of a business circumstances.

GAP coverage: Some (but not all) leases may include GAP coverage just in case the car is totaled very early in the lease agreement. In such cases the consumer is protected if the worth of the car is lesser than the amount owed to the lessor.