Signing a lease or choosing a long-term rental may work out well for you. Both options have benefits and downsides, and you can go with the one that best suits your circumstances. Visit eAutoLease.com to learn more about leasing, how it works, and what you can do to make the auto leasing process easy to start driving a car as soon as possible.
Rent or Lease – Which is a Better Option?
Whether you should rent or lease depends on how long you need a car, how quickly you need it, and how much flexibility you want. While leasing provides you with more vehicle options that can be cheaper if you want it for two to four years, rentals can be better for short-term needs, especially if you want a car immediately.
In addition, a rental company can provide insurance if you need coverage, but if you go for leasing, you will have to go for auto insurance.
Read more: Can You Trade In A Lease Car?
What is a Car Lease?
Leasing a vehicle is just like a rental vehicle. It allows you to drive a car for a pre-determined period of time. What is important to know here is that lease comes with some restrictions. You can only drive up to a certain number of miles, there are termination fees, and you may have to pay for damages to the car when you return it.
A car lease can last anywhere from two to five years. You are paying to use the vehicle and the vehicle value you use during this period. Once the lease comes to an end, you have to return the car.
You also have the option to buy the vehicle if you choose by paying the remaining car value, also known as its residual value.
Leasing a Car
Before you decide about leasing or financing and renting, you should first understand your driving needs and habits and most importantly, your financial status.
The following questions will help you reach a better decision:
- How much of a monthly payment can you afford?
- What is more important – the monthly payment or the total cost of the vehicle?
- How will you pay for the car – cash on hand, financing, or a line of credit?
- Can you make a down payment?
- How many miles or kilometers do you drive?
- Do you want to drive a new car every few years?
- Do you want something to trade in for the next vehicle?
Leasing and Renting – Are They Similar
The basic idea behind leasing and renting is similar, especially when you compare leasing or renting with buying a car.
- They are both short-term commitments
- You only pay to drive the car for a pre-determined time
- Someone else is the car owner
- You cannot personalize the vehicle or make alterations to it
- There will be a mileage limit
- You can drive a new model car for less money than buying it
Read more: Insurance For Leased vs. Financed Cars
Differences Between Leasing and Renting a Car?
Leasing a car is a much bigger commitment as compared to renting one. The distinction between a car lease and a car rental is the length of the contract, where you get the car, and how you are covered by auto insurance. The main difference between leasing and renting lies in what you will provide upfront. While a car dealership offers a car lease, either short-term or long-term, it has fixed requirements than renting a car.
A lease usually lasts two to four years, while rentals can last anywhere from one day to several months. You will have to go directly through a car dealership if you are leasing, but you can rent a car from any car rental company.
Most rental cars can be covered by standard auto insurance if you have one. Even if you don’t have auto insurance or want additional coverage, the rental agency will offer one. On the other hand, if you are leasing a car, you will be required to have your own auto insurance policy. You will need at least the state’s minimum car insurance coverage requirement. Many lessors also require you to purchase additional coverage to meet their insurance requirements since they own the car.
Pros and Cons of Leasing vs. Renting a Car
If you want to drive the same car for a few years without buying it, leasing is better than renting. Entering a lease involves a down payment followed by monthly payments for the lease terms.
Keeping in mind the pros and cons of leasing a car can help you make the right decision.
Pros of Leasing
Wide selection of cars – When you lease a car through a dealership, you have the opportunity to choose between most of the car models available. You can select the latest one or the model you have always wanted to drive. Rental companies do not have a wide selection of cars, and you will have to take what is available as they don’t guarantee an exact model.
Leasing is less expensive – Leasing a car may cost less than renting as you will pay less per month on a lease compared to a rental car of the same model for the same amount of time.
You can purchase the car at the lease end – If you are happy with the vehicle you have been driving during your lease term, you can also buy out your lease. Once the lease ends, you can pay for the rest of the car’s value, as set in the lease terms, and it will be yours.
Cons of Leasing
It is for two years or more – In most cases, you must lease for two years or more. If you want a car for a short period, a lease may not work out for you.
It takes time – Finalizing a lease contract can take some time as paperwork is required. Renting does not need much paperwork in comparison. Lessors also check your credit score and income to ensure you will make monthly payments.
When it is Better to Rent a Car Instead of Leasing It?
There may be times when choosing a long-term rental may be a better idea than leasing a car. Long-term rental offers two key benefits, speed, and flexibility, which you may not get with leasing. Leasing a car is a long process that requires a credit check and a longer application process.
If you do not have a high credit score or cannot wait long for the paperwork to complete, renting a car will get you a vehicle faster. Even though rental terms vary by company, you can get rental contracts for up to a year if you want a car for a shorter period.
Sometimes rental companies also offer the possibility of changing cars more frequently. It works for many people who don’t want to get stuck with the same vehicle for years.
Requirements for Leasing a Car
Leasing a car is not as simple as just showing up at a dealership and picking up your favorite model. It is more like getting a car loan than renting.
If you want to lease a car, you will need the following:
A current driver’s license – The dealer will want to verify your identity and know you are authorized to drive.
A good credit score – The dealer wants to ensure you have a history of making payments in full and on time.
Auto insurance – The dealer wants to know that the car is protected in case anything happens while you are leasing it.
Proof of income – The dealer wants to see if you have a source of income so you can make payments on time.
If you don’t have these credentials, you may not be able to lease a car or may have to bring a cosigner. A cosigner will put their name on the loan and agree to make payments if you fail to.
Requirements to rent
As compared to leasing, renting is relatively simple.
All you need to rent a car is:
- A valid driver’s license
- A credit card or debit card
Whether you rent for a few days, a month, or even longer, these are the main requirements to rent a car. The rental company also wants to ensure you are financially secure to cover the car if something happens to it, and they will run a credit check.
Understanding the pros and cons of renting and leasing can point you in the direction that suits your needs. A lease is the best option when you know what car you want to drive and feel confident that you will be happy driving it for a few years. A rental may work well if you are not ready for a full commitment of lease, need the car for a shorter time frame, or have a smaller budget. Check out eAutoLease.com for more information on leasing and what you can do to find the best deal within your budget.
