Why is it profitable to buy a car on lease, and not take a loan?
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Why is it profitable to buy a car on lease, and not take a loan?

Take a car on lease or loan? As a rule, the choice comes down to priorities. Many drivers are interested in the question of savings - which option is cheaper now? For some car owners, it's about the benefits of ownership. Before choosing the path you will take, it is important to understand the key differences between leasing and lending.

Most Ukrainian car owners choose to purchase a car with a delivery from the EU countries - for example, Poland. This is a popular way to purchase high-quality vehicles, since the approach to servicing and changing a car in the EU and Ukraine is significantly different. For example, in Lithuania, car enthusiasts can change a car every few years. Ukrainian drivers, due to their income level, tend to change cars much less frequently.

Leasing or credit?

When you take car leasing, pay to use transport for a certain period of time. The conditions of some companies include restrictions on the number of kilometers you can drive and your own modifications. Various fees apply.

At the end of the rental period, you have the option to return the car to the dealer or purchase it for a predetermined amount specified in the rental agreement.

When you take out a car loan, you immediately get ownership of it. You own it in full if you pay for it in cash or after the loan is repaid if you finance the purchase. You retain control of every aspect of the vehicle and can ultimately keep it, trade it in, sell it or give it away.

Benefits of leasing and lending

Leasing payments are usually lower than monthly payments on a new car loan. They depend on such factors:

  • sale price - negotiated with the dealer, as when buying a car;
  • leasing duration is the number of months for which you agree to lease a car;
  • leasing fee - this fee is indicated in currency, not as a percentage, but it is equivalent to an interest rate;
  • taxes and fees: these are added to the rental and affect the monthly cost.

Some dealers require an initial rental fee. The more you deposit, the lower the leasing fee will be.

Keep in mind that it may not make sense to invest too much money in a car that you end up returning to the dealer. If you are quite sure that you are going to buy it after the lease expires, the down payment will lower the purchase price.

Leasing advantages

  • Lower monthly expenses. Leasing can ease the financial burden of monthly expenses a little. This usually involves a smaller down payment compared to the purchase. Because of this, some people opt for a more luxurious car than they could afford.
  • New car every few years. For many people, there is nothing better than the feeling of a new ride. When the lease expires, you can return the car and get your next new car.
  • You don't have to worry about reselling. You simply return the car (unless you decide to buy it). The only thing you need to worry about is paying any fees at the end of the lease, including abnormal wear and tear or extra mileage on the car.

Benefits of lending

  • No restrictions. You are not required to pay fees related to vehicle mileage and wear and tear. Because it belongs to you, you pay for service and repairs at your convenience.
  • Full control. If you bought a car on credit, after its repayment, you can keep the car for yourself, immediately sell it or give it to someone. The choice is yours.

Disadvantages of lending

  • Fast depreciation. New cars can lose 15-25% of their value during the first five years of ownership. If you consider your car an investment, then this is a disadvantage. However, if you're the kind of person who buys and keeps a car for years, it doesn't matter.
  • Driving expenses. According to an AAA study conducted in 2021, the cost of driving a new car for about 20 km was about $000. Costs included fuel, insurance and maintenance.

What are the options to buy a used car in Ukraine?

If you decide to take car by installments, the best option would be to contact a reliable and stable company. AutoMoney is one of the most successful representatives of this sphere in the Ukrainian car market. The company offers auto-selection (specialists will select a car for you according to your wishes). You can also choose a new or used car yourself, and drawing up contracts, fitting, etc. will remain with the AutoMoney employees.

To apply for leasing, you only need a passport, TIN, a valid driver's license and the required amount for the first installment (discussed individually). Thus, car leasing is an affordable way to purchase a vehicle for almost every Ukrainian.

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