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Understanding the Difference Between Leased and Rented Cars

Cruising through the roads of Dubai in a sleek and powerful car sounds like fun. But it begs the question: should you buy, rent or lease a car? The idea of either leasing or renting a car is often much more appealing to consumers. It offers people more flexibility in terms of the vehicle they can afford and the amount of time in which to repay the costs. So, to rent or to lease? - and what’s the difference? In both instances, you’re essentially paying for a car that is owned by someone else. However, there is a distinction between renting – which is considered a more short-term arrangement, and leasing – which is generally over a longer timeframe. Many people also choose to lease a car as it offers them the opportunity to own the car once the contract period is over.   

Timeframe of Use

When you lease a car, it is more akin to purchasing a vehicle – albeit with a loan towards which you will need to make regular payments. A customer will lease the car until the value of the vehicle is paid or till they wish to lease another vehicle. People will generally rent a car over a much smaller timeframe. This could be anything from a couple of days to a couple of weeks. People typically rent a car when they are on a vacation or away from their normal place of residence.

Opportunity to Own the Car

Many people choose to lease a car because it gives them the chance to own the vehicle outright at the end of the contract period. This is commonly referred to as a ‘lease-to-own’ agreement. To be more precise, a person can elect to discontinue paying the lease or pay up to a threshold to own the vehicle outright. While renting a vehicle is a relatively simple process, there is no provision to own the vehicle at the end of the contract period.


Both car rental companies, as well as car dealerships, offer the provision to lease vehicles from them. Dealerships that provide such an option prefer to lease the vehicle through a traditional finance model. In contrast, customers prefer to rent a vehicle from a specialist rental agency. Dubai, for instance, has a plethora of rental agencies, so it is essential that you work with a reputed and trusted agency.

Differences in Car Insurance

While insurance on a rental vehicle is only recommended, it is usually a ‘must-have’ when leasing a vehicle. In most cases, it’s also a requirement that the person leasing the vehicle has full coverage insurance. This will include comprehensive benefits and collision coverage – to protect the car’s value. When renting a vehicle, customers pay a ‘liability’ which covers most aspects of their use. However, the rental agency may offer additional insurance at a reduced cost. This further protects the customer if there is any damage sustained to the vehicle.