PETALING JAYA: Leasing a vehicle could be a better alternative than buying one if you plan to use it for less than five years.
That is the advice from Universiti Teknologi Mara Department of Economics and Finance Studies senior lecturer Dr Zetty Zahureen Mohd Yusoff.
“Leasing is a better option for those who intend to purchase a vehicle to use for less than five years before changing it as they can save a lot in upfront costs and monthly payments.
“Also, leasing a vehicle reduces the financial burden on those who cannot afford the maintenance costs as one would only be paying for the vehicle’s depreciation during the lease term, not its full value when compared with signing a nine-year purchase agreement.”
Zetty said buying a vehicle means one would be paying off the debt and will ultimately own it outright, whereas leasing involves making payments for as long as the lease is in force.
She said lease agreements are protected from the vehicle’s depreciation because the leaser will return it at the end of the term.
However, there are some restrictions in leasing. For instance, the lessee cannot modify or personalise the vehicle as he wishes.
She said several things must be considered before leasing a vehicle such as the lease duration, future investment plans, personal preferences and monthly costs.
“Owning a car means having an asset at the end of the hire purchase agreement. However, if you plan to switch to a new car every few years then leasing will offer flexibility.
“Leasing a car allows people to drive a new car every few years. However, buying means they must commit to a single car for a longer period. However, buying allows for ownership pride once it is paid off.”
Zetty said leases do away with servicing costs unlike owning a vehicle since vehicle owners must bear all the maintenance and repair costs, especially after the warranty period expires.
She said before deciding between leasing and owning a vehicle, individuals must assess if their decision is based on a long or short-term basis, and whether it is an investment, for ownership pride or personal preferences.
“The decision to buy or lease a car should align with the financial situation, lifestyle and long-term automotive requirements of the lease.”
She said individuals who plan to switch to a new car every few years without suffering a loss upon retrading it should consider leasing as it offers flexibility.
Former Malaysian Bar president Salim Bashir said when draughting a leasing agreement, the Contracts Act 1950 will apply, and impose duties and liabilities to protect the rights of all parties involved.
“The Act generally deals with amounts to be paid based on leasing terms, the duration of the lease, limitations on travel distance, if any, and liabilities on repairs and maintenance cost.
“The agreement will make it clear that ownership and title to the car shall throughout remain vested in the lessor. The lessee shall use the vehicle as the custodian would.”
