Is car leasing or renting better? When is each one appropriate?

Leasing or Renting which is better

Leasing or renting are two of the most popular options for those considering acquiring a car.. Each one in turn has its pros and cons, so it is convenient to know in more detail what its characteristics are to determine which modality is the best option. From an internal perspective, the difference between these two options is certainly considerable. The purchase of the car supposes an increase of the patrimony, but with the renting and the leasing this does not happen.

What does it consist of: Car leasing or renting?

It is true that the financing of the car increases the indebtedness that in the end is reflected in the liabilities, however it must be taken into account that most of the time the choice of one or another modality, passes a lot by the tax treatment in the operation. Let's see what each of these consists of rental and car rental modalities.

Leasing

It is a type of car rental with option to buy; In other words, if in the end the company does not want to keep the vehicle, it means that it will have paid a rent for the use of the car in a certain period. The cars acquired through financial leasing are reflected in the asset, however a reservation of ownership is constituted that favors the financial institution, which is not eliminated until the last payment of the fee is made.

Renting

Renting is also a type of vehicle rental, however, there is no purchase option here, so the car never belongs to the company or individuals. It is also important to mention that car rental fees are usually somewhat higher than those of leasing, mainly because in addition to the rental fee, maintenance, insurance, replacement, etc. expenses are also included.

When is each one appropriate?

With leasing and renting have many similarities; To start the company or individual you have to pay a fixed monthly fee, for which you get not only the car, but also the additional services that we already mentioned such as maintenance, management of fines, insurance, etc. The interesting thing here is that renting is not only focused on companies, SMEs or freelancers, it is also designed for individuals.

In fact, these groups tend to have large advantages with renting, particularly with regard to tax matters. In other words, renting fees can be deducted, thereby minimizing costs and thanks to the absence of an investment in fixed assets, additional liquidity is available to focus on other areas of the business. The financial advantages for the individual do not existHowever, you do not have to worry about paying taxes, maintenance services, insurance or even handling fines.

In the end it all comes down to the use that will be given to the vehicle, understanding, for example, that in the rental contract determines a quantity of contracted kilometers with a small discount that is applied if that amount is not reached. Probably the most profitable use is the one where it is contracted thinking about the use and doing it in an intensive way, since it is when there will be a greater consumption of the tires and more possibilities of maintenance.

For not so regular use, it is of course not a profitable option, Except that everything has to do with comfort. This is in fact one of the great differences with respect to leasing, that is, assuming all the costs of maintenance, insurance, replacement, among others. With the renting there is no obligation to purchase, There are even many companies that do not penalize the client if he decides to terminate the contract at any time. On the contrary, with the leasing no additional services are included in the fee.


The content of the article adheres to our principles of editorial ethics. To report an error click here!.

Be the first to comment

Leave a Comment

Your email address will not be published.

*

*

  1. Responsible for the data: Miguel Ángel Gatón
  2. Purpose of the data: Control SPAM, comment management.
  3. Legitimation: Your consent
  4. Communication of the data: The data will not be communicated to third parties except by legal obligation.
  5. Data storage: Database hosted by Occentus Networks (EU)
  6. Rights: At any time you can limit, recover and delete your information.