There is one common thing between leasing a car and renting a car: you are allowed by the car rental or leasing company to use them because you agreed to pay a certain fee.
But apart from that, the two arrangements differ from each other in many ways. There are also advantages and disadvantages for both arrangements. This article will discuss all the differences between car leasing and car rental.
It is hoped that this information will help you decide which is better: to lease a car or to rent a car.
Differences Between Car Leasing and Car Rental
1. Time involved
A car lease normally involves a longer time than that of renting a car. Renting a car normally from Budget or Home Depot takes only a few days to a couple of weeks, and certainly no longer than a month. However, leasing a car from Enterprise usually takes longer than a month.
2. Application
Car leasing is usually for companies while car rental is designed for private individuals or families. Companies use car leasing instead of buying their own fleet of cars because they can forego the cost of repair and maintenance, which is very costly and very labor intensive.
Private individuals and families rent cars from car rental companies whenever they are on vacation in other lands, or for just plain fun, and not for business purposes, although some individuals use rental cars for their business activities.
3. Cost
Relatively, the cost of leasing a car and renting a car is almost the same. The major factors defining the costs are the length of time the car will be used and the particular make and model of the car.
Since leasing a car involves a longer time, its cost is relatively higher. For instance if a car’s rent is $50 a day, and you lease it for one month, you will have to pay at least $1,500.
If you will just rent the same car model for just one week, you will only be required to pay $350. In reality, you are both paying the same amount – only that leasing the car is more expensive since you are using the car much longer.
However, since you are leasing a car for a longer period, you can request for certain discounts from the car rental company and they will be amenable to extending you this privilege, since for the next 30 days, your car lease provides them constant revenue.
4. Commitment
In car leasing, you are fully committed to pay for the car for the agreed period, even if you will not use the car every day within that period. You are tied up based on the terms that you have agreed upon on the lease contract.
With renting a car, you can do it day-by-day. That means you only pay for the day that you have actually used the car. There is no time or money wasted.
5. Mode of Payment
By leasing a car, you are required to pay for the long term. That means you have to schedule regular payments for the use of the car equivalent to the length of the time you want to use it.
It is in some ways, similar to paying your mortgages to a bank loan. In renting a car, you pay for the day that you will be using the car. There is no long term commitment, and your money is not tied up to any car.
6. Insurance Requirements
Leasing a car will require you to have insurance protection relative to the lease of the car. In reality, it is a long term purchase; therefore the agreement has to be covered by insurance for any eventualities.
But in renting a car, your personal car insurance coverage will suffice since you are just using the car for a couple of days and no longer than a couple of weeks. Insurance coverage is oftentimes included in the car rental package.
Advantages vs. Disadvantages
To square off the discussion about the difference between car leasing and car rental, you should also understand some of their advantages and disadvantages.
With car leasing, you are always assured that the type of car that you want is always available. Since you are leasing a car that you have chosen from the lot of the car rental company, that car will always be at your service anytime you need it. There is no waiting for another car or another model. The car is always at your service.
However, in renting a car, you will be at the mercy of the dispatcher of the car rental company. Oftentimes he will pull out any car that is available in his car lot and not the actual car that you want. It also happens that you won’t be able to use a car because they are all being rented out. This often happens during peak season.
