Anyone who wanted to access a car had, traditionally, two ways to do it: buy it in cash or through financing. However, a third alternative has begun to become popular in recent times, which until recently was reserved exclusively for companies: renting. A particular type of car rental, long term; usually between two and five years. It may be convenient in certain cases, while not in others.
But why would anyone choose to rent a car in Lahore or any other city instead of buying it? One of the main advantages offered by this system is that it does not require a significant outlay at the time of purchasing the vehicle. When buying a financed car, there is usually a requirement for a payment known as “down payment” and usually around 10% of the car’s total value. On the other hand, when accessing a car by renting, all expenses are distributed in the installments corresponding to the contract’s duration.
Comfort, the greatest advantage of renting
However, the most important benefit of accessing this type of rental car is the comfort it provides. A convenience due to the fact that the payment of the monthly renting fee covers many of the services necessary for the maintenance of the vehicle: periodic inspections in official workshops, coverage of breakdowns, tire changes, comprehensive insurance, and, if necessary, vehicle replacement. Furthermore, many of these contracts also include roadside assistance service, claiming fines, management and payment of taxes, and technical vehicle inspection (ITV).
Many renting companies offer the possibility that, at the end of the rental contract, the user can buy the car in question. However, if after paying the monthly fee during the years of the contract, you decide to buy the car, in the end, it will be more expensive than if it had been bought in installments (and more expensive still, of course, than if it had been bought in cash).
A recent comparison determined this. In strictly economic terms, renting is only appropriate if the car has to be kept during the contract dates and not beyond that period.
Reasons why renting may not be suitable
In addition to the indicated in the previous paragraph, there are several other reasons why renting may be an untimely decision. In the first place, a contract implies a commitment, and in cases where it is necessary to terminate it prematurely (for whatever reason: illness, move, change or loss of employment, etc.), companies stipulate penalties equivalent to half of the fees that remain to be paid.
Another factor that must be assessed is that you can travel a limited number of kilometers with the rented car, also established in the contract. The most common is that the maximum is 20,000 kilometers per year. However, this figure may vary depending on the user’s needs (which, of course, should also vary the cost of the monthly fee). If the user exceeds that maximum allowed by the contract, he will also be forced to pay the penalty.
One more element that can make some people doubt the convenience of renting is the obligation to go only to official workshops and adhere to all the other conditions signed in the agreement. Ultimately, the user must remember that the vehicle is not their property, a fact that, on occasions, can also represent a compelling reason to discard this option.
Tips for before deciding (or not) for renting
We offer some recommendations for those who have opted for long-term car rental or for those who are considering it. The main ones are the following:
Look and compare. There are companies specializing in renting, and car brands themselves and even banks increasingly offer cars for rent. Take as much time as you need to analyze models and costs and decide on the one that is most appropriate for your particular situation.
Estimate the distances to be covered. A 20,000 kilometers maximum per year is equivalent to about 55 kilometers per day. Many people can be more than enough, but if someone needs the car to join long distances, they must keep it in mind to avoid the penalties. The amount of these are fixed in the contract: an amount of money for each kilometer that is exceeded. If, during the term of the contract, the user realizes that his previous calculations were wrong, or if his activities were modified and for this reason, he must travel greater distances, he can propose to the company to recalculate the fee.
Ask about the purchase option. In general, renting companies do not set a value for the vehicle purchase option at the end of the contract: they only offer an estimate. The final figure is given when the contract ends, based on market values at that time. Beyond the fact that -as already mentioned- the total cost of a vehicle purchased in this way (all the renting fees plus the final payment) ends up being higher than if the financed car is purchased, it is convenient to find out as much as possible about it.
Read the contract carefully. This is valid advice for any commitment that a consumer is going to sign with a company. But in a case like this, in which there are so many values, clauses, and conditions at stake (and in which, for a not so important difference in money, a financed car can be bought, with all the differences above in the case), paying special attention to all the points of the agreement becomes essential.
Wisdom of Life 