12 August 2019 · MGM News

Leasing vs buying | Questions To Ask Yourself

Leasing a car gives you access to a vehicle for an agreed period, which can be for personal or business use, or a combination of the two. You will generally make regular payments over the course of the lease and may have the option to buy the car, or start leasing a new vehicle, at the end of the lease term.

Buying a car involves you purchasing a vehicle so that you own the vehicle outright. You can either make your purchase using a car loan, which can be paid off in a period of up to seven years, or by buying the vehicle using your own savings. You are then free to use the vehicle as you wish, as well as sell it.

Leasing vs Buying

Purchase a vehicle using a loan or your own money that results in you owning it outright.

✅ If you decide to take out a loan, your repayments will be similar to what you would pay if you were leasing, but at the end of the term you will own the car outright

✅ Setting up your loan correctly can allow you to pay it off quickly and it is generally more flexible than a lease

✅ You have the choice of including a trade-in and/or deposit 

✅ You can choose to have a balloon payment at the end of the loan term

✅ Claim the car as your own asset whether you take out a car loan or buy the vehicle outright

❓May require a larger upfront cost

❓The value of the car depreciates in time, making your investment less valuable

 

Leasing vs Buying

Purchase a vehicle under a contract, and drive an average number of KM annually.

✅ Does not tie you down to a single vehicle and gives you the option to upgrade your car every two or three years

✅ No upfront money is required

✅ An option for businesses that don't want cash-flow tied up in depreciating assets

❓In the long-term, leasing a car may be just as or more expensive that a car loan when you take into account monthly repayments, fees and charges.

❓You are unable to make any alterations to the car

❓You cannot claim the car as your own asset for other borrowing or financial purposes

Questions To Ask Yourself

  • How often will I be driving the car? Leases usually require you to drive an average amount of kilometres annually, so you need to consider this before you apply.
  • Do I own a car now? If you already own a car and are looking at purchasing a new one you may be able to take advantage of a trade-in offered at Mount Gravatt Mazda. You also have the option of selling a car to be able to put more money on a loan upfront
  • Will the car be for business or personal use? If your car is mainly for business use you may be able to work out a novated lease with your employer, or if you are opting for a personal car you need to consider how you will be using it and whether a lease or purchase will be best for you.
  • What is my credit history like? Our Business Manager's are able to provide feedback on your suitability for loan and leasing products best suited to your current situation