Drag each label to the correct location on the image.
Distinguish between the disadvantages of leasing a vehicle and the disadvantages of purchasing a vehicle.
mileage limitations
large down payment
no vehicle equity
vehicle depreciation
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Distinguishing between the disadvantages of leasing a vehicle and the disadvantages of purchasing a vehicle, here are the common disadvantages associated with each:
Disadvantages of Leasing a Vehicle:
1. Mileage Limitations: When leasing a vehicle, there are usually mileage restrictions that you have to adhere to. Going over the agreed-upon mileage limit can result in additional fees.
2. No Vehicle Equity: Unlike purchasing a vehicle, when you lease, you do not own the vehicle at the end of the lease term. This means you have no equity in the vehicle and cannot sell or trade it in for value.
3. Continuous Payments: Lease payments are ongoing expenses. After the lease term ends, you need to either return the vehicle or enter into a new lease agreement, resulting in a never-ending cycle of payments.
4. Wear and Tear Charges: Leasing companies often charge fees for excessive wear and tear on the leased vehicle when returning it. You may be responsible for costs associated with any damages beyond normal wear.
Disadvantages of Purchasing a Vehicle:
1. Large Down Payment: When purchasing a vehicle, you typically need to make a down payment, which can be a significant amount of money upfront.
2. Vehicle Depreciation: Vehicles generally depreciate over time, meaning their value decreases. When you purchase a vehicle, you bear the risk of its value depreciating, potentially impacting its resale value in the future.
3. Maintenance and Repairs: As an owner, you are responsible for all maintenance and repair costs for the vehicle, which can be substantial over time.
4. Selling Challenges: If you decide to sell your vehicle in the future, you may face challenges in finding a buyer or getting a fair price, particularly if the market value for the specific make and model has declined.
These are some of the key differences in the disadvantages of leasing a vehicle versus purchasing a vehicle.
To distinguish between the disadvantages of leasing a vehicle and the disadvantages of purchasing a vehicle, let's first understand what each means.
Leasing a Vehicle:
Leasing a vehicle involves paying a monthly fee to use the vehicle, similar to renting it for an extended period. At the end of the lease term, you return the vehicle to the leasing company. Disadvantages of leasing a vehicle include:
1. Mileage Limitations: Many lease agreements come with yearly mileage limits. If you exceed these limits, you may have to pay extra fees per mile.
2. No Vehicle Equity: Since you don't own the vehicle when you lease it, you won't build any equity in it. This means you won't have any asset to sell or trade-in at the end of the lease.
Purchasing a Vehicle:
Purchasing a vehicle involves buying it outright or financing it through a loan. You become the vehicle's owner. Disadvantages of purchasing a vehicle include:
1. Large Down Payment: When purchasing a vehicle, you typically need to make a significant down payment upfront. This can be a financial burden for some individuals.
2. Vehicle Depreciation: A car's value depreciates over time, meaning it loses value. When you purchase a vehicle, you bear the risk of its depreciation. If you decide to sell or trade-in the car later, it may be worth less than what you paid for it.
Now, let's place these disadvantages on the image:
Leasing:
- Mileage Limitations (Drag to Image)
- No Vehicle Equity (Drag to Image)
Purchasing:
- Large Down Payment (Drag to Image)
- Vehicle Depreciation (Drag to Image)
Ensure you understand the concept and reasoning behind these disadvantages and their respective categories before placing the labels on the image.