Car On Lease Sydney
Confused whether leasing a car, or buying it would be a better option for you? We’ve got you covered. With the rate of car lease Sydney topping the charts in car lease in Australia, let us look though the pros and cons of it.
WHAT IS CAR LEASE?
Car lease is a signed contract between a car dealership or private owner (known as lessor), and a car user (known as lessee). The agreement is such that the dealership or owner rents out their car to a client for a specified period of time. In return, they receive monthly payments from the lessee. Usually, a down payment is also required to be made by the lessee.
TYPES OF CAR LEASE:
Usually, there are 3 types of car leasing options-
- FINANCIAL LEASE: In this type of car lease Sydney, the lessee leases a car on the condition of regular monthly payments for a prescribed time-period. After usage over the stipulated time-period, the lessee is bound to purchase the car by making a balloon payment of the residual payment. They may also refinance the residual amount and extend the lease term.
Pro- Monthly EMIs are less compared to other leases since they are estimated on the original value of the car before GST is added to it.
Con- Paying the residual amount at the end of the lease term might be tough for the lessee at that point of time
- OPERATING LEASE: A car lease where one can use the car up-to the agreement term, after which they have to hand it over to the rightful owner.
Pro- No worry about payment of residual amount.
Con- Monthly payment rates are higher than other leases, since they include servicing costs, maintenance costs, insurance.
- NOVATED LEASE: A novated lease means the lessee of the agreement pays monthly rentals to lessor indirectly. The employer of the lessee deducts his non-taxable income, and takes the obligation of monthly payment to the lessor, along with running costs of the vehicle, including servicing, registration, insurance, fuel.
This is called “salary package” where a third-party (the employer) is involved in making regular rental payments by deducting effective taxable salary of the employee. At the end of the lease term, the lessee has the option of returning back the car, or buying it by making the residual payment, or refinancing the residual to extend the lease agreement. They may even trade the car in exchange of a new lease agreement for a new car from a new lessor.
Pro- It is an effective tax saving scheme. Multiple options at the end of lease agreement term make it a safer choice.
Con- “Fringe Benefits Tax” may be applicable. There may be restrictions regarding the terms of usage of car.
CAN YOU LEASE A CAR IN SYDNEY?
A mass population is opting more towards leasing a car than buying it. Keep reading to know why:
WHY LEASING A CAR IS SMART?
- CONSTANT CHANGE: You work at a transferable job. And hardly live in a city for more than two to three years. Yet you want to avoid the inconvenience of public transport. With a car lease, you no longer have to worry about selling your car before you leave for a new city or a new country. Or transportation charges for your car.
You can simply lease a car and utilise it to your maximum benefit for any time period that you wish to use the car for!
- GREATER CONVENIENCE: When you buy a new car, you have to also worry about fuel cost, insurance cost, registration, regular vehicle servicing. But when you lease a car, you don’t even have to worry about registering it under your name, leave alone the hassle of regular maintenance. Majority of car lease agreements include on-road costs.
- COST EFFECTIVE: Owning a car means owning a depreciating asset. Monthly EMIs against a car loan sum up to be much greater than its resale value. Also, even if you do not use your car for an extended period of time, you will have to service it regularly, or else, motor parts may be damaged.
When you lease a car, you utilise it to the maximum benefit during its tenure. After completion, you may opt for another car lease, or not, depending totally upon your requirement.
- FREEDOM OF CHOICE: With the option of car lease, you can use different cars – different models, different brands at different periods of time!
- REDUCED FINANCIAL STRAIN: There may be a time when there is an absolute necessity of a vehicle for your daily purpose. If you don’t have the immediate budget of buying a car, leasing a car is definitely the best option for you!
IS IT CHEAPER TO BUY A CAR OR LEASE IT?
Generally speaking, leasing a car is cheaper than buying it. And also, more convenient.
However, the cost of buying a car or leasing it varies according to the brand or model of the car that you choose, condition of the car, interest rate, amount of time period over which you will pay the EMIs or lease it for.
WHICH OPTION IS BEST FOR YOU?
Coming back to our first question: which option is best for YOU?
We, at Finance Brokers NSW, look at the bigger picture for you, instead of assessing just your short-term gains.
Like every other finance deal, car lease option too comes with its own set of risks and disadvantages, the major one being no equity share. Also, most car lease agreements come with a bulk down payment.
Connect with our experienced brokers who will assess all your risks and benefits and customise your finance plan as per your financial condition, salary, financial budget, and customise the best plan for your requirement. We always look into the bigger picture. Trust us on getting the maximum benefit of your financial choice.