Distinguish between the disadvantages of leasing a vehicle and the disadvantages of purchasing a vehicle.

Disadvantages of leasing a vehicle:

+) mileage limitation

+) no vehicle equity

Disadvantages of purchasing a vehicle:

+) large down payment

+) vehicle depreciation

Explanation:

+) Mileage limitation: When hiring a car or motorbike, according to the usual contract, you will receive a fixed amount of kilometers/ miles that you can drive. This limitation is to help the vehicle owner control the quality, depreciation of the vehicle. However, it could be a disadvantage because you may need to go a longer way than limitation.

+) No vehicle equity: When you purchase a vehicle, vehicle equity is the difference between the value it and the amount owned on your loan. (For example, if your vehicle costs $5,000 and you have an auto loan balance of $2,000 => you would have $3,000 in equity). Some banks allow people to use their vehicle equity to offer them a loan, so that they can get the auto loan for the equity but can spend on the other things.

=> So that when you do not purchase but lease a vehicle, you will not have the vehicle equity for other expense when in need.

+) Large down payment: As the value of a vehicle is high, so that when you purchase, the total amount of money you have to pay is much more higher than when leasing. In addition, in almost circumstances, you still need a quite large amount of money (not the full amount) to pay in advance.

+) Vehicle depreciation: when you use your vehicle, its quality will go down gradually, leading to the lower result of the vehicle - it is the depreciation.

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