Why buy an apartment by the sea if you are going to spend only a few days or weeks there? It’s easier to rent a hotel room and not think about utility bills, repairs, cleaning, or even what to eat for breakfast. The same approach is demonstrated by “advanced” drivers: why pay the full cost of the car if you are going to drive it for only 3 years? Why burden yourself with maintenance, a considerable fee for insurance, etc.?.
You can save yourself from such hardships using modern financial instruments. It is referred to leasing. The record holder in this area is the USA: more than a third of all new cars are sold to private individuals there. Comparable statistics are also available in European countries. Moreover, car leasing has already surpassed car loans in popularity.
On the one hand, car loans and car leasing have a common nature: they allow you to gradually acquire property into ownership. However, in comparison with a loan, leasing has a number of advantages. The main ones are convenience and price. Leasing companies offer more flexible payment schedules, fees are lower than for car loans and a simplified procedure for concluding a contract. You can buy a car for leasing even using a mobile application, in a few clicks. Learn more info and try on your own.
When buying a car on credit, the car immediately becomes the property of the buyer. All the responsibilities for the maintenance of the car fall on the new owner together with the ownership. And for example, with Ford Transit lease, all the hassle and additional expenses (insurance, taxes, maintenance, different sets of tires, etc.) are taken over by the leasing company. At the end of the contract period, the car can be redeemed at the residual value, or it can be returned. Most often, the financial rental of cars by private individuals ends precisely with the return of the car and the conclusion of a new contract for a new and more modern vehicle. This practice has been a familiar component of mass consumer culture for several decades.
Technological progress does not stand still, the change of the model range and the emergence of new functions, technological capabilities, occurs so quickly that even recently purchased cars can become obsolete quite quickly. The average car ownership period is 5 years in the USA and China, 6.5 years in Japan and 7 years in Germany and Canada. Of course, this is an average statistic, and there are nuances. For example, residents of regions change cars less often than car owners in large cities; premium brands are changed more often than mass ones, and so on. However, the trend is obvious: the attitude to car ownership itself has changed. A car is no longer a luxury, but a means of transportation.
Car loans are gradually fading into the past as an anachronism. They have done their job by teaching people to live here and now, without postponing needs for tomorrow. Now is the time for more modern and flexible financial instruments.
Photo by Alex Guillaume on Unsplash