Question

Analyze and discuss if it is better to buy or lease a car? Select one of these positions and provide at least three reasons why this option is better than the other.

Your submission should be a minimum of one half page of content in length, answering each question with a substantive paragraph of 4 – 5 sentences in length. Please type the question as well as your answer.

Answer 1

Analyze and discuss if it is better to buy or lease a car?

Answer: Buying a car means the user can pay the total cost of car and keep the car for as long as he/she wants and after he/she may sell off the car at a salvage value. Leasing means paying a contractual lease amount to the owner of the car and the user gets to keep the car for the contracted period. And, their will be no salvage value post the end of the contract period. Thus, on the light of these definitions, to decide whether buying or leasing is a good option depends on several factors. These factors may include:

• The financial position of the buyer - weak financial position favours leasing over buying
• Whether the buyer is an individual or a company - For a company, leasing should be preferred because of the tax benefits that they get
• How much ( number of miles) a user expects to drive the vehicle
• The temperament of the user towards change of perception with regards to a vehicle - More frequent change of perception favours leasing over buying

Select one of these positions and provide at least three reasons why this option is better than the other:

Answer: It is always better to lease a vehicle than buying it because of following reasons:

• By leasing a vehicle, the user gets to free himself of the need of taking the vehicle for regular maintenance and paying for it.
• If a new model gets launched, the user can very easily switch to the new model without the burden of selling the old vehicle and then waiting to buy a new one.
• Leasing provides access to a vehicle without much upfront cost and hence the cash flows of the individual or the business owners. The business owners get additional benefit by claiming tax rebates against the leasing cost.