Buying a car on credit: comparison with renting a car

In 2025, the choice between buying a car on credit or leasing is becoming an important decision for many drivers, especially those who want to balance their budget and transport needs. Buying on credit allows you to own a car, but comes with interest and long-term commitments. Leasing, on the other hand, gives flexibility and minimal hassle, but can be more expensive in the long run. In this article, I will compare both options so you can see which is best for you.

Assess your financial capacity

The first step is to understand what you can afford. Buying a car on credit or lease has different financial implications. A car loan, for example, a LADA Vesta for 1.2 million rubles, with a down payment of 20% and a rate of 12% per annum for 5 years, will cost a monthly payment of about 20 thousand rubles. For 5 years you will overpay about 350 thousand rubles on interest. Renting requires lower costs at the start: a day's rent of Kia Rio costs 2-3 thousand rubles, but for a year when using 10 days a month it is already 240-360 thousand rubles. If your budget is limited, renting may be easier, as it does not require large investments.

Consider the additional costs of the loan

When buying on credit, you face additional costs. The bank may require you to take out hull insurance, which will add 20-50 thousand roubles a year. You also need to pay for MTPL insurance (8-15 thousand roubles), taxes and maintenance (20-30 thousand roubles a year). For example, replacing tyres for a purchased car will cost 20-30 thousand rubles. Renting gets rid of these costs: insurance and maintenance are included in the rental price. Buying a car on credit or renting in this case depends on whether you are ready for additional payments.

Compare long term costs

Long-term perspective is an important factor when choosing between a loan and a lease. If you buy a car on credit, after 5 years it will be yours and you will be able to sell it, returning part of the funds. For example, in 5 years a car for 1.2 million may cost 600-700 thousand roubles on the secondary market. However, during this time you will pay interest and spend money on maintenance. Lease does not give you an asset, but gets rid of obligations: you pay only for the use. A car loan or hire purchase may be more favourable in the long run if you plan to use the car for more than 5 years.

Think about the overpayment on your loan

The loan overpayment is a significant factor. At an annual interest rate of 12% for 5 years, the overpayment will be about 30% of the value of the car. If you take out a loan for a more expensive car, such as a R3 million car, the overpayment can be as high as R1 million. A lease, while seemingly more expensive in the short term, does not include overpayments as you pay a fixed amount for usage. For example, a 5-year lease can cost 1.5-2 million rubles, but with no additional obligations. Auto on credit vs lease in this case depends on how much you are willing to overpay for ownership.

Consider flexibility of use

Flexibility is one of the main advantages of renting. You can rent different cars depending on your tasks: a sedan for city trips or an SUV for travelling. For example, you can rent a Hyundai Creta for a weekend trip or a compact Volkswagen Polo for work. Buying on credit limits you to one car, and if your needs change, you'll have to sell the car and take out a new loan. Whether you buy a car on credit or lease in this case depends on how important freedom of choice is to you.

Appreciate the convenience of changing plans

If your plans change, leasing gives you more freedom. For example, if you move to another city or temporarily don't need the car, you simply end the lease without financial loss. With a loan, you have to make payments even if the car is idle, or sell it, losing out on the value. Imagine: you bought a car on credit, but after a year you decide to move abroad - you will have to close the loan early or sell the car. Credit car purchase or lease in this case makes renting more convenient for those who are not sure about the future.

Consider maintenance issues

Maintenance is an important aspect that influences your choice. When buying on credit, all the costs of maintenance, repairs and replacement parts fall on you. For example, oil change every 10 thousand kilometres will cost 5-7 thousand rubles, and repair after a minor accident - 20-30 thousand. Renting gets rid of these worries: the rental company itself maintains the cars, and you pay only for the use. For those who do not want to spend time on maintenance, buying a car on credit or renting leans towards renting.

Consider insurance and risks

Insurance when buying on credit can be a significant burden. Hull insurance, mandatory for most loans, increases annual costs, and in the event of an accident, repairs will be at your expense if the insurance doesn't cover the damage. Renting, on the other hand, includes insurance in the price, and the risk of damage is borne by the rental company if you choose full coverage. For example, when you rent a car, you won't have to worry about minor scratches, whereas with a loan, it's your responsibility. Buying a car on instalments or hire purchase in this case makes renting less risky.

Think about the environmental aspects

The environment is becoming an important factor in 2025. If you buy a car on credit, you can choose a hybrid or electric car, such as the Kia Niro Hybrid for 2 million roubles, which will save on fuel and reduce emissions. However, renting allows you to use eco-friendly cars without major investments: many rental companies offer electric cars, such as the Nissan Leaf, for 7-10 rubles per minute. For those who want to minimise their carbon footprint, buying a car on credit or leasing may lean towards renting if you're not ready for a big outlay.

Calculate fuel savings

Saving on fuel is another aspect. Buying an economical car on credit, for example, with a consumption of 5 litres per 100 km, with a mileage of 15 thousand kilometres per year will cost 41 thousand rubles for petrol (at a price of 55 rubles per litre). Renting an electric car can be cheaper: charging for 100 kilometres costs about 100 rubles, which for the same mileage will be 15 thousand rubles. However, renting includes the cost of hire, which can exceed the savings. Car loan or hire in this case depends on how important fuel savings are to you.

Compare available offers

In 2025, the market offers many options. Car loans are available from banks with rates from 10 to 15% per annum: for example, a loan for a Hyundai Solaris for 5 years with a down payment of 20% will cost 15-20 thousand rubles per month. Renting through a carsharing service such as Yandex.Drive costs 5-10 rubles per minute, and a long-term lease costs about 30 thousand rubles per month for an average car. Comparing offers will help you understand what is more favourable - buying a car on credit or renting - depending on your needs.

Research the terms and conditions of banks and rental companies

Before choosing one, study the terms and conditions. Some banks include hidden fees or require additional insurance, which increases the cost of the loan. Rental companies may also charge penalties for excess mileage or damage. For example, renting through a carsharing service may include fuel but with a mileage limit. Researching the terms and conditions will help you make an informed choice between a car on credit versus a rental, minimising hidden costs.

Conclusion: find the right fit

Buying a car on credit or lease in 2025 depends on your finances, plans and needs. A loan is suitable for those who want to own a car and are ready for a long-term commitment despite overpayments and maintenance. A lease is ideal for flexibility, minimising risk and being hassle-free, especially if you don't plan to use the car all the time. Compare costs, consider overpayment, maintenance and the environment to find the best option that makes your life more comfortable and cost-effective.