The classic ways of purchasing a vehicle are giving way to new, more flexible options that allow you to enjoy advantages not offered by traditional purchases. Originally, renting and leasing referred to services for companies, but seeing their good reception, the range was opened to private customers.
Each of these forms of long-term rental has its advantages and disadvantages, although the option chosen by each user will be the one that suits their expectations. Above all, if you want to own the car in the long run.
What is a ‘rental’?
Leasing is a rental for a medium and long-term period, normally between three and five years, in which a company that owns the vehicle leases it in exchange for a monthly fee. With this formula, you enjoy all the advantages of owning a car, but without the bond and the costs that owning it entails.
What is a ‘lease’?
For its part, leasing is also a medium- and long-term lease, but with the peculiarity that it offers a clause for a purchase option at the end of the contract. In this way, the client must pay an entrance fee and another fixed monthly fee, in addition to the expenses derived from the maintenance of the vehicle.
Differences between ‘renting’ and ‘leasing’
The most notable difference between both alternatives is the object of the contract. In the first case, the renting company provides the car to the user and takes care of all the derived costs: taxes, maintenance, breakdowns, insurance, and assistance, among others. You still retain ownership of the car.
The leasing contract, however, is regulated by law and the contingencies and advantages of car ownership are the responsibility of the client. He assumes all the rights and obligations as if he were the owner of the same, even if he does not execute the final purchase clause.
This is another key: leasing offers an option to purchase the vehicle at the end of the contract. The renting user can renew it or change cars at the end of the stipulated time.
Continuing with the differences, another substantial one is the formalization of the contract. While in renting mutual acceptance between both parties is considered valid, in leasing it must be formalized through a credit institution.
Also for individuals
It has often been repeated that renting is more suitable for individuals and leasing for companies since the regulation established that the vehicle must be used in the client’s professional or business activity. For this reason, until now it could only be hired by freelancers and companies. However, there is now a leasing service for individuals as well.
On the other hand, leasing is a financing system and is included in the company’s fixed assets and liabilities. Therefore, it has the added advantage that the monthly fees can be tax deductible.
What is the best option, ‘renting’ or ‘leasing’?
In the end, the differences mentioned between the two car rental systems can help to choose the best option for the client, although there are some more keys to take into account.
If the monetary issue is important and you want to invest as little as possible in the car, renting is the winning option, since it includes all maintenance costs. Except for fuel costs and fines, which are paid by the driver. Leasing is also the best alternative if you do not want to manage, for example, taxes or insurance. Since the rental company itself is in charge.
If, on the other hand, you need to own a car, leasing is the best option. Without forgetting that, in this case, it implies facing the derived expenses, such as maintenance, breakdowns, roadside assistance… In addition, leasing is better if what you want is to amortize the car in a long term, from of the 10 years.
Lastly, if the priority is to change vehicles every so often to enjoy the latest advances in safety and technology or better labeling from the DGT (with which to access the new low emission zones), the modality that wins is renting.