Leasing vs Purchasing A Car: Which Option Should You Choose?

If you're trying to decide between Leasing vs Purchasing a Car, there are pros and cons for both options. Here we will outline a few of the key differences so you can make an informed decision.

Thinking about leasing a car?

Leasing a car can be a great option for individuals or businesses who want to drive a new car without the big price tag. When you lease a car, you're only responsible for monthly payments for the term of the lease.

You don't have to worry about selling the car or trading it in when you're ready for a new one. And since leases are often short-term, you can upgrade to a new car every few years.

Here are some of the pros and cons of leasing:

Pros:

1. You can drive a new car every few years.

2. Leasing payments are often lower than loan payments for purchasing a car.

3. Maintenance and repairs and even fuel may be included in the price of the lease

4. If you are a new business that doesn't qualify for a secured loan, you may qualify for a lease

Cons:

1. You never own the car outright, so you never have the option to sell it or trade it in.

2. As you don't own the vehicle, there will be limitations on the use and modification you can make to it. For example, you might not be able to take it on rough terrain or add a bull bar.

2. You may be charged fees for excessive wear and tear on the vehicle at the end of your lease term.

3. If you go over the agreed-upon mileage limit, you may be charged extra fees.

While you may have the opportunity to purchase the vehicle at the end of the lease term by paying a residual payment, you should be aware that this amount is often much higher than the car's market value. So before you decide to lease, make sure you crunch the numbers and see if purchasing is a better option for you in the long run.

So what about purchasing a car?

Purchasing a car gives you obvious advantages including the freedom to keep the car as long as you want and make any modifications you please. But it also requires a larger upfront capital investment and monthly payments that are usually higher than lease payments.

Here are some of the pros and cons of purchasing:

Pros:

1. You own the car outright, so you can keep it for as long as you want or sell/trade it in when you're ready for a new one.

2. You have no mileage restrictions and can use the car however you please without fear of being charged extra fees.

3. You can modify the car however you see fit without having to worry about breaking any rules or agreements.

4. There may be tax advantages including the government's current tax depreciation incentives.

Cons:

1. Purchase of a vehicle will require a large capital investment

2. Maintenance and repair costs are your responsibility.

3. The value of your car will depreciate over time.

Businesses have the option of purchasing a new or used vehicle by way of a secured loan, known as a chattel mortgage. This gives your business the benefits of owning the car outright from the start and monthly payments can be structured to meet your cash flow.

So, which option is right for you?

This really depends on your individual needs and preferences. First, you should consider how long you plan on keeping the car. If you only need it for a short time, leasing may be the better option since you can trade it in for a new one after a few years. However, if you want to keep the car for a longer period, purchasing may be the better choice since you'll eventually own it outright.

Consider your budget!

Consider your budget and how much you're willing to spend each month. Lease payments are typically lower than loan payments, but you may be charged extra fees for things like excessive wear and tear or going over your mileage limit. Ultimately, the best option for you will depend on your individual needs and preferences. So, be sure to do your research ahead of time to make the best decision for your situation.

Talk to the experts at Finance Brokers Victoria

Before making any decisions on leasing or buying your next vehicle, talk to our team at Finance Brokers Victoria. With over 36 years in the industry, we have the knowledge and know-how to help your business find the right deal to meet your needs.