Assessing the Distinction between Rental and Leasing of Long-Term Cars

Rental and Leasing a car Often confuse people due to the similarities but we have assessed some of the distinction between the two term to clear the doubts of our valuable client.

Cars are expensive, and no one would want to buy one after landing in a new country. Further, vehicle prices are always fluctuating, meaning that you would need a lot of money to buy a car when the trends are upwards. Despite the ever-increasing prices, most people prefer owning vehicles instead of using public transport. Public transportation is inconvenient, particularly when traveling with elderly people and children. You would also want to avoid it if you have to travel to many places on the same day.

However, getting a personal car does not mean purchasing one. The market offers many options, but car rental and leasing are the leading ones. This guide will help you decide between the two. We have listed the key factors to help you make an informed decision during your next travel.

The Period of Use

The use period forms one of the key differences between a car rental and leasing. Car leasing is a longer commitment, and it allows you to use the vehicle regularly. More like getting a loan and purchasing a car, you will have to continue paying monthly rates until you are ready to rent another vehicle or buy the leased car.

The Period of Use

On the other hand, car hire for the long term has a narrow commitment. You can rent for one month or one year. Short-term rentals, ranging from one day to one week, are also common.

The Type of Provider

Generally, car rentals come from car dealers. On the other hand, rented cars come from rental agencies situated at airports or standalone stores. Car dealers who provide leased cars also sell vehicles. Lease arrangements are an alternative to the traditional financed purchases.

Rental car shops keep cars to rent them and generate income. They are a good choice for people who fly for vacations or who travel for business in other countries.

Car Ownership Potential

Leasing generally offers an option of owning the vehicle after the lease period. Lease terms are slightly different from borrowing to pay for a new car. Also known as lease-to-own deals, car lease arrangements allow you to stop paying more rates at the end of the lease period or pay more to own the car at the end.

Rental cars have no ownership potential. You will only pay a fee to use the car of your choice for a set period. After that, you will have to return it for others to rent.

Vehicle Insurance Requirements

Insurance is mandatory for leased cars but optional for rented cars. Mostly, you only need to carry liability insurance when driving any car. However, most car dealers will require you to buy full coverage after leasing a vehicle. It has to include comprehensive and collision benefits to protect the car. Even though your liability coverage will cater for rental, car rental companies will offer you an option to buy the insurance they sell.

How Long Can You Lease or Rent a Car?

Usually, car lease periods range between 2 and 4 years. In other words, you will make 24-48 payments. The lease cost will be predetermined because the lease will lock you into making all the payments. On the other hand, long-term car rentals are more like a monthly agreement. The price will increase if you choose to rent from time to time. However, the rental companies will be happy to help you extend the rental period after selecting the rental start date and the end date.

Now, you might ask, is a short-term vehicle lease possible? While a car lease for 6 months is possible, most car dealers do not offer short-term leases. In other words, if you are planning to keep the car for less than 24 months, car hire for the long term is the best choice.

In every car lease, the individual leasing the vehicle has to pay the depreciation costs incurred during the lease period. As a result, the dealership saves money because they will not lose any money as the car loses its value. Still, the driver saves money because they spend lesser money on the car than they would spend when buying one.

A lease will be less appealing to both the dealership and the driver if the lease period is short. For the driver, the monthly payments would go up because they have to pay for the reduced car value. The car dealers would have a hard time getting drivers ready to pay for the high amount. So, it is hard to find a car lease for 6 months or 1-year.

Should You Rent or Lease a Car

If you need a car for less than one year, go for a long-term car rental. Leasing a car for three months is not possible but renting one for a short period is possible. If you do not know the type of car to go for, long term car renters will allow you to switch the car periodically. That will help you choose the best car.

Should You Rent or Lease a Car


Rental and Leasing a Car sound similar, but the differences manifest after diving deeper. Car lease comes with a fixed contract and a fixed term of use. Therefore, your commitment period will be longer, and you might not get a car lease lesser than one year. Long term car rental is meant for people planning to keep a car for less than two years. It is a good choice for expats in the UAE and those who plan to spend a long time in the country. Consider your needs when choosing between the two.

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