CAR FINANCE

LEASE OR BUY

Financing a car can be a minefield to the uninitiated, especially when the salesperson starts bandying about terms like hire purchase, novated leases, residuals and balloons. But despite the confusing nature of the jargon, most of the finance products on offer are fairly simple and with a little understanding you can make sure you are getting the best deal for your situation.

There was a time not so long ago when the options for getting a new car were to either buy it yourself or hope that you were given a company car as part of your job. But today the choice is wide open with finance products that range from the traditional bank loan to novated leases, all aimed at getting you behind the wheel.

In determining what finance product is best for you, you first have to decide whether you should buy or lease. The essential difference here is that if you buy a car, you own it and it is yours to do with as you please.

Leasing a car means that you are only paying for the use of the car and at the end of the lease term, officially, you have to hand it back or take out another lease. The legalities get a bit murky here and, in practice, it is possible to buy the car at the end of the lease period under certain types of leasing packages.

There are no hard and fast rules as to whether leasing or buying suits people better and it is a topic that should be discussed with an accountant. But having said that, if you use your car for business and private purposes or your employer is willing to include a car as part of your salary package, then leasing is well worth looking at. There can be significant tax advantages especially for cars in the prestige and luxury sectors.

Although leasing has taken off in the private sector to a large degree in the US and Europe, we still have an ownership culture and while the numbers of private or semi-private lease deals are growing, the vast majority of people in Australia still buy their cars.

Iconic has an in-house car finance specialist that will be able to help you out with the best option for financing your next new car. Contact us to arrange a catch up.