Difference Between a Lease and a Loan for a Car in Saudi Arabia

Last Updated On Sun Jul 14 2024

When it comes to financing a car in Saudi Arabia, two main options are available: leasing and taking a loan. Understanding the differences between these two methods can help you make an informed decision that suits your financial situation and driving habits in the Saudi market.

What is a Car Lease?

A car lease is essentially a long-term rental agreement. You pay to use the car for a specific period, typically 2-4 years, and return it at the end of the lease term, unless you decide to buy it.

Key Aspects of a Car Lease

No Ownership: You do not own the car during or after the lease term unless you decide to buy it at the end.
Lower Payments: Monthly lease payments are generally lower than loan payments because you’re paying for the car depreciation during the lease term, not the full value.
Fixed Term: Leases have a set duration, commonly 24, 36, or 48 months.
End-of-Term Options: At the end of the lease, you can return the car, buy it for a predetermined price, or lease a new vehicle.
Mileage Limits: Leases typically include mileage restrictions and exceeding these limits incurs additional fees.
Maintenance Responsibilities: Lease agreements often require you to maintain the car and keep it in good condition, although some maintenance costs may be covered.

What is a Car Loan?

A car loan is a financing method where you borrow money to buy a car, making monthly payments over a set period until the loan is fully repaid.

Key Aspects of a Car Loan

Ownership from the Start: You own the car once you get the loan, even though the lender holds the title until the loan is paid off.
Higher Payments: Monthly payments are generally higher than lease payments because you are paying off the entire value of the car, including interest.
Longer Term: Loan terms typically range from 36 to 72 months, with some extending even longer.
Full Ownership After Repayment: Once the loan is paid off, you own the car outright with no further financial obligations to the lender.
No Mileage Limits: There are no restrictions on how many miles you can drive.
Maintenance Responsibilities: You are responsible for all maintenance and repair costs from the moment you purchase the car through the loan.

Key Differences between a Lease and a Loan

Ownership:

Lease: You do not own the car and must return it at the end of the term unless you choose to buy it.

Loan: You own the car once the purchase is complete and after the loan is repaid.

Payments:

Lease: Monthly payments are generally lower.

Loan: Monthly payments are typically higher.

Term:

Lease: Fixed, shorter terms, usually 2-4 years.

Loan: Longer terms, generally 3-6 years or more.

End of Term:

Lease: Options to return, buy, or lease a new car.

Loan: Full ownership once the loan is paid off.

Mileage & Maintenance:

Lease: Mileage limits and some maintenance responsibilities.

Loan: No mileage limits and full maintenance responsibilities.

invygo’s Subscribe to Own Alternative

invygo's Subscribe to Own Plan is a convenient way to own a car in Saudi Arabia without any leases or loans. The subscription plan works straightforwardly: drivers pay a monthly fee that covers the car, insurance, maintenance, and roadside assistance. The driver chooses the subscription length among the options available, and at the end of it, there’s the choice to keep the car – by making a final payment – or return it.

After the first subscription month, drivers are eligible to swap the car: upgrade it, change categories, or go for a newer model. The subscription monthly fee is adjusted to reflect the change, but the benefits remain the same.

invygo’s Subscribe to Own Plan is the easier way to become a car owner: the benefits of renting combined with the possibility of owning at the end of the contract. To get started, drivers need to submit their driver’s license and ID or Iqama, plus a payment method. invygo doesn’t request salary letters, certificates, credit checks, or guarantors: it empowers its drivers to go their own way.