Insuring Your Vehicle - Leasing vs Owning
When looking to buy a new car, consumers always have a number of go-to options with respect to ownership: cash, lender financing or a leasing agreement. A lease or buy decision should be made with financial comparisons in mind and what is important to you as a consumer.
- Pay Cash — You own the vehicle outright.
- Finance the Vehicle — The bank or a finance company is the lienholder.
- Lease Contract — You have no ownership interest in the vehicle and you are essentially engaged in a rental contract.
Outright ownership of a vehicle gives the owner an option of purchasing nothing but liability insurance if he or she so chooses. However, it is always recommended to purchase comprehensive coverage at a minimum. And full coverage would be the best choice to ensure full protection of the owner's interest.
Financing a vehicle is the how most car buyers choose to do business. Technically, the buyer owns the vehicle but is still required to purchase insurance coverage by the vehicle's lien holder. Once the loan is paid in full, the vehicle owner has the option of choosing their level and scope of coverage.
Leasing a vehicle creates the same insurance demands on the lessee as finance companies do toward buyers. However, leasing places an additional demand on consumers by requiring them to purchase gap insurance.
This type of insurance is designed to cover the distance between what collision or comprehensive insurance pays for a car that is totaled, and the amount the lessee still owed on the leasing agreement at the time of the accident. The cost of gap insurance is normally included in the monthly payment.
No matter which of the three scenarios is selected, each comes with its own unique set of terms for what the consumer needs in terms of car insurance coverage.