It’s time for a new car and having made the decision to buy, the next question is often not what car, but how you are going to pay for it?
Despite the confusing nature of the jargon, most 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 car finance options ranging from traditional bank loans 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
Leasing a car means 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, but we’ll go into that later.
There are no hard and fast rules as to whether leasing or buying is best for you – it’s a topic that should be discussed with an accountant. Having said that, if you use your car for business as well as private purposes, or your employer is willing to include a car as part of your salary package, a car lease 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 and own them.
Types of purchase finance
Hire Purchase (Consumer Loan)
Where to shop for Car leases
The growth of car leasing in Australia has, up until recently, been as a result of the number of large businesses running big fleets of cars, who long ago realised there was little point in owning a continually depreciating asset.
They figured why have the hassle of having to maintain and dispose of cars and light commercials which were often turned over in relatively short periods when you could simply pay for the use of the vehicle and leave everything else to the lease company.
Some of the traditional finance companies only have a small interest in leasing so probably the best place to investigate leasing is through specialists like Aussie Car Loans. Because of the volume of business done by Aussie Car Loans, a wider range of products are available and its easy to tailor them specifically for your needs.
Types Of Lease Finance
Car leases fall into two categories as either a finance lease or operating lease and vary in the way they treat ownership, disposal and residual risk on the vehicle.
|Private Car Finance||from 6.95%||comparison 5.39%*|
|Dealer Car Finance||from 6.95%||comparison 5.39%*|
|Commercial Car Finance||from 6.45%||comparison*|
*The interest rate of 4.60% is available to approved applicants financing a motor vehicle on a secured consumer fixed rate loan over 60 months. The comparison rate of 5.39% is based on a 5 year secured fixed rate loan of $30,000. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Applications for finance are subject to normal credit assessment. Conditions, fees & charges apply. Authorised Credit Representative (# 475944) of Advantage Aussie Pty Ltd (Australian Credit Licence # 390233)