Aside from housing repayment, your very own car/vehicle is one of the most valuable expenses you can experience. Convenience is one of the reasons why people are getting themselves a new vehicle. You’ll be able to travel anywhere and anytime you want in your own new vehicle. And you can also save time since there’s no waiting for buses or carpools.
Should you get a new vehicle lease or buy a new vehicle? This is the question that you must carefully think about if you’re considering getting a set of wheels. It’s a tricky question and a tough one since it concerns factors such as finances, obligations and ownership duties. You should carefully weigh which option will work best for you based on your current situation.
There are differences between getting premium new vehicle leasing and new vehicle finance services. It’s better to know more about them before making your choice. So, let’s learn more about these two options.
What is premium new vehicle leasing?
New vehicle leasing is when you borrow the vehicle for a certain period of time, usually three years or less, and make monthly payments in exchange for having the vehicle. The usual process is for you to take the vehicle out of the dealership, you first need to make an initial payment which will cover taxes and other fees involved. Then, you make the monthly payment for the specified period of time. When the leasing period is over, you’ll just have to turn in the vehicle.
In leasing, you just “rent” the vehicle for a certain period. And when the term period is done, you can either renew your lease, buy the vehicle at its current value, or you can trade it in for a different or newer model.
Dealership may check your current income, credit score and employment status to see if you’re qualified for new vehicle leasing.
Here are three different types of new vehicle leases. If you’re decided you want to lease a new vehicle, check these options and select the best one for you.
- Novated lease – a three-way agreement that works best for salaried employees. The agreement will be between the employee, the employer and the financier. It’s an easy process. The employee signs the lease contract, the dealer provides the new vehicle, and the employer takes out the monthly lease payment on the employee’s taxable income.
- Finance lease – commonly used for new vehicles in businesses. The process is simple. The financier buys the vehicle and leases it to the borrower, in this case, mostly businesses or organizations. The borrower then pays a fixed monthly amount. By the end of the lease period, the borrower has an option to pay the residual value of the vehicle and take its ownership or renew the lease for another term.
- Operation lease – this works similar to a rental agreement. You only pay for the use of the vehicle. Somewhat similar to a finance lease except you don’t need to pay the residual value of the vehicle. By the end of the lease period, all you need to do is return the vehicle to the financier.
Do you still have questions about new vehicle leasing? Talk to our professional brokers at The Brokerage Connection Business Advisory to get the necessary finance information you need.
What are new vehicle finance services?
Certainly, getting a new vehicle is expensive but most of us still want to have one. This is when it’s time to consider getting a new vehicle financing.
New vehicle financing is getting a loan or borrowing a certain amount of money for the purpose of buying a new vehicle. When you don’t have enough money at hand to make the purchase but have the capacity for monthly payments, consider getting a vehicle loan for funding instead.
So how does vehicle financing work? First, you pay the financial institution that lends the money a fixed monthly amount including interest. Part of your agreement with the financier is the term period of how long you need to pay the borrowed money. The term period is normally three to five years.
Remember that this is different from vehicle leasing. You’re making the monthly repayments to eventually own the vehicle. You’re not just borrowing or renting it.
If you decide to take a new vehicle financing, take note of these elements to better understand this option.
- Loan period – duration of time to pay the borrowed money. Longer-term means you’ll have a longer time paying the money but a smaller amount of monthly payment.
- Interest rate – this is an important information that you should know when getting new vehicle finance. Lenders will be offering different rates so compare them first before deciding on one. Learn also how to regularly calculate your interest rate.
- Fees and charges – this could include upfront fee, ongoing fee, break fee, late fee payment and other fees that can affect the amount of your vehicle loan.
- Vehicle loan repayments – lenders usually offer a monthly repayment, but they can also do weekly or fortnightly options depending on which one works best for you.
- Balloon payment – refers to the one-off lump sum amount that you need to pay at the end of your term period with your financier.
- Lender – research and compare various lending institutions to know which offers the best option that works for your current situation. Make sure your choice is a trusted enterprise.
Now comes the crucial question…which one is better?
Answering this question is hard. But it all comes down to your preferences. There’s really no right answer. Choosing the best one for you will depend on factors like your current finances and lifestyle. New vehicle leasing and new vehicle financing both have their advantages and drawbacks.
New vehicle leasing is flexible. Depending on your budget, you can choose the term period that works best for you. Your monthly payments are also lower compared to vehicle financing which can allow you to have a more luxurious vehicle. Plus, you are free to choose a different vehicle model when your current lease expires.
In contrast, if you get a new vehicle financing, you’ll get to own the vehicle after paying the borrowed money. Your insurance premiums will also be lower compared to vehicle leasing. And since you’re paying to eventually own the vehicle, you can choose to sell or trade it in whenever you want and just pay the remaining amount of your vehicle loan.
Choosing between new vehicle leasing and new vehicle financing is a serious financial matter. So it is always best to weigh your options and consider necessary factors when deciding.
The bottom line is, regardless of your decision, it’s always best to consult the experts first for their advice and insights on premium new vehicle leasing and finance services.
Contact our Business Advisory to guide you in assessing your finances and choosing the best option that suits your needs.
