Imagine that you could have a new car every year without worrying about paying insurance, inspections, or road tax. In return, you would only have to pay a fixed fee every month. Sounds good? Well, now stop imagining because this thing that we are telling you already exists: it is called renting and, like everything in life, it has advantages and disadvantages.
Although we all know that the ideal is to save to pay for the purchase of a vehicle in cash, most people end up financing it, that is, requesting a loan from the bank in order to pay it off. Dealers also offer financing to ensure hot buying.
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What is renting?
Renting is an alternative financing formula aimed at people who cannot or do not want to pay for their vehicle in cash and who do not want to finance it in a conventional way.
It is a rental operation through which an intermediary ( rental company) buys the vehicle you have chosen and makes it available to you in exchange for a monthly rental.
The minimum rent is usually twelve months, almost never less, and can last up to four or five years. During the term of the contract, you do not have to worry about maintenance, repairs, or insurance … The fixed fee includes all these expenses. You will only pay the rent and the fuel consumed by the vehicle.
In this article, we will review the advantages and disadvantages of renting so that you can have an objective opinion on whether or not it is a good idea to purchase a vehicle with this formula.
Advantages of renting
These are the main advantages offered by vehicle renting:
- Vehicles for all budgets. Depending on what you want to pay each month, you can rent one vehicle or another. The range of options is huge.
- You pay a fixed fee and nothing more. There is no entry of money and no payment of interest. You pay your flat rent and forget about everything else.
- You do not have to pay for insurance because the proportional part of the policy’s amount is already included in the fee you pay. Normally it is comprehensive insurance without excess.
- Nor do you pay for periodic reviews (such as oil changes) or breakdowns or tire replacement. All these expenses are also included in the fixed fee.
- You can change cars every time you finish the contract, so you will always drive a new vehicle.
- If you want to continue with the same vehicle at the end of the contract, you can study an extension or buy the vehicle for the previous amount that you agree with the lessee.
It seems irresistible, right? Keep reading to have all the information.
Disadvantages of renting
Not all are advantages. Vehicle renting also has significant drawbacks:
- The car is not yours at any time, but the company that rents it, so for practical purposes it is like a debt that never ends. Every month you pay for the car, but it will never be yours.
- You cannot cancel the contract, and if you do, you will have to pay an early cancellation penalty. We already warn you that these penalties are expensive.
- You cannot exceed the number of kilometers established in the contract, and if you do, you have to pay the penalty. Of course, if you do not arrive, they also pay you the difference.
- You can only take the vehicle to the agreed workshops indicated by the renting company.
- You cannot customize the car to your liking or modify its original condition. You will not be able to tint the rear windows or choose the type of tire. You would have to ask the company for permission, and they give it the go-ahead.
It could be said that it is a financing formula aimed at freelancers and companies since it allows them to enjoy some tax advantages. The private individual, as it is a conventional rental, is not entitled to any tax deduction.
Wisdom of Life 