Are you an entrepreneur and need a car, but don’t want to make the traditional purchase? Don’t have the right funds or don’t want to use them in this way? In that case, you have two alternative solutions: leasing and long-term rental. Which one is worth choosing? Leasing or long-term car rental? Remember that your decision should be as well thought out as possible, so compare both options in the context of your own needs.
What is long-term rental?
Before we start wondering what to choose, leasing or renting a car, let’s try to briefly describe the long-term rental service. What is long-term car rental? Long-term rental means concluding a rental agreement between the customer and the car rental company, under which the customer can use the selected car for a set period, paying a monthly installment. When wondering what is more profitable, leasing or renting, it is worth paying attention to the issue of the initial payment. The rental company may, but does not have to, require the lessor to pay a specific amount of money. Also consider the issue of mileage limits – some rental companies decide to set a specific threshold that the user cannot exceed. If this happens, the customer may be required to pay a certain fee. Limits do not apply to every rental company, but this is an important element of the decision-making process. In addition, after the rental ends, the car can usually be purchased, but ultimately this is an individual decision of the customer.
What is leasing?
Car leasing, like long-term rental, is a contract that allows you to use the vehicle within a specified time frame. After the end of the contract, the customer can decide to buy the used car – usually the buyout amount is relatively low. It is worth remembering that leasing is divided into operational and financial leasing. In the case of operational leasing, VAT is paid together with each subsequent installment. Lease installments paid monthly, in turn, constitute costs of obtaining income. Financial leasing operates on slightly different principles. When choosing financial leasing, the entrepreneur must pay the entire amount due for VAT at once, while only the interest part of the monthly leasing installment is treated as costs of obtaining income. These differences should be of great importance to the entrepreneur at the stage of choosing a specific leasing offer – before making a final decision, it is necessary to carefully consider which solution will be more beneficial and determine your own expectations.
Comparison of Leasing and Long-Term Rental: What to Keep in Mind?
We already know what leasing and long-term rental are, now we can get to the heart of the matter, which is comparing these two options. Leasing and long-term car rental: what are the similarities worth remembering? First of all, you need to bear in mind that regardless of whether you decide to rent or lease a car, during the term of the agreement, you will not be the owner of the vehicle, which may translate into the freedom to use the car and the level of decision-making. When using a car under a rental or leasing agreement, you must comply with its provisions, which sometimes involves specific restrictions. Keep this in mind and study the provisions of the agreement you are signing very carefully.
Leasing vs. long-term rental – differences worth knowing
You know the similarities, but what about the differences? Leasing vs. car rental – what is the difference between these two solutions?
- Length of contract. When considering leasing vs. long-term rental, consider your expectations regarding the length of the contract. Most often, a leasing contract is several years longer than a long-term rental contract, so if you decide to rent, you have the chance to change the car to another model that interests you after some time. Ultimately, however, the optimal length of the contract is largely an individual matter, so at the stage of making the decision between leasing and rental, determine your own needs in this regard.
- The issue of purchasing the car after the contract ends. Before you decide whether to rent or lease a car, consider whether you want to buy the used vehicle later. This is very important because one of the main differences between leasing and long-term rental is the amount of the fee for buying the car. Usually, in the case of leasing, the cost of buying the car is lower, compared to long-term rental, but the final amount of the buyout depends on the specific offer, so if you are planning to buy the car, compare the costs.
- Entry fee. What is better to choose: leasing or renting? When choosing between these two solutions, you need to analyze the amount of the initial fee. As a rule, in the case of leasing offers, the initial fee may (but does not have to) be higher than in the case of long-term rental. Lessors usually require a specific fee, while car rental companies often waive it. Why is it so important? When wondering what to choose, long-term car rental or leasing, consider the issue of your own financial possibilities.
- Kilometer limit. When comparing car leasing and vehicle rental, you need to remember the mileage limit mentioned above. In the case of car rental, rental companies often decide to impose a specific mileage limit (driving over the limit may require paying an additional fee). That is why, when deciding to rent, you need to analyze the issue of the optimal limit very carefully and consider what number of kilometers will be sufficient for you.
- “Care” for the car you use . Don’t know what will be better for you: leasing or long-term rental? In the case of long-term rental, rental companies very often extend an “umbrella” of care over the cars used by customers, taking care of insurance, service, etc. Of course, the scope of these services is an individual matter, so always read the signed contracts carefully. The possibility of using such care can be an attractive solution from the point of view of people who are very busy and want all the responsibilities related to car maintenance to be transferred to specialists. Additionally, rental companies often offer professional fleet management of the company, which can be an interesting option if a given company decides to rent several cars through one rental company.
What is more profitable: leasing or renting?
Knowing the differences and similarities between leasing and long-term rental, you can make a more informed, responsible decision. So what to choose: a leased or rented car? Leasing will be an excellent solution for entrepreneurs who plan to buy a car after the lease agreement expires. Leasing usually means the possibility of buying a vehicle for a relatively small amount, while long-term rental may involve the need to pay a larger amount. That is why, when considering leasing and long-term rental, it is worth defining your future plans related to the vehicle you are using. Long-term rental, on the other hand, is an interesting option for people who value the possibility of changing cars frequently. After the lease agreement ends (often shorter than in the case of leasing), the customer can decide to rent another car, adapted to changing needs, while resigning from buying the previously used vehicle. Additionally, the lack of an initial fee can usually be very beneficial from the perspective of entrepreneurs who do not have the appropriate funds or want to use them in a different way.
In sum! Leasing vs. long-term rental – how do they compare? Both solutions have many unquestionable advantages and are an interesting alternative to a car loan. However, it is impossible to clearly state which one will be better for you, it all depends on your individual needs and expectations, so try to specify them when making the final decision.
