Everyone has to buy the car they drive, right? Wrong! Many Australians are turning to a great alternative to buying a car outright – car leasing. There are many misconceptions about car leasing out there. Some people think leasing is just like “renting” a car for a very long time! Though leasing and renting share superficial similarities, there are a lot more benefits to leasing than meets the eye. There are even more benefits to leasing over buying! Here are some:
Lower monthly repayments
The best part about leasing is lower regular repayments. Since you aren’t paying off the entire value of the car like you would with a car loan, you have the benefit of lower monthly (fortnightly or weekly) payments compared to a loan. These payments are fixed so you’ll know exactly how much you’re spending each pay period.
Have the latest model each time…
Typically, car leases don’t last more than five years. You’ll be hard-pressed to find a lease that goes for that long. Leases vary in length, but usually go for 12 months up to 36 months with various terms in between. At the end of each lease, you have an option to hand back the car (after you’ve paid for any unusual wear-and-tear as part of your lease agreement.) With some leases, you can elect to buy the car by paying the residual value or trade it in for another lease. This means you will always have the latest models with the latest features. …and you don’t have to worry about owning a ‘bomb’
When you own a car outright and pay for a loan, depreciation catches up with you. At the end of your loan, you may have paid more for the car than it is now actually worth. This means you won’t have to worry about offloading a vehicle worth far less than what you paid for it.
You won’t take that hit!
Lower upfront and maintenance costs
Leases usually don’t require you to pay any upfront costs, or when you do they’re much lower compared to buying a car. Maintenance of your vehicle is assured with far less hassle compared to those who buy cars.
Tax benefits for business
As your financier will buy the car as a business expense, they can claim the GST on the purchase price and pass on those savings to you. If you’re in a business and use a lease car for 50% or more business purposes, you too can claim the interest paid on the vehicle and depreciation (in some cases.) Talk to a financial professional for more information.