If you’ve found the car of your dreams that ticks absolutely every box, it’s now time to decide whether you’re going to buy it or go with a lease.
Each option comes with its own positives and negatives and, of course, it will depend on your particular situation as to which one you choose. However, to simplify things a little bit, we thought it might be useful to put together a list of pros and cons for both to help you on your way to getting into your new car!
Buying a car - pros and cons
So there are actually a couple of ways to buy a car. The first is, no surprises, handing over a briefcase that was handcuffed to you full of non-sequential, unmarked bills to the value of the car you’re buying. A bank cheque works too, I suppose, but that’s definitely not as cool.
The other way to buy a car is to get a secured or personal (unsecured) loan from a bank or lending institution. Long story short, a secured loan means the lender holds the asset (your car) as security against the loan - if you default, they can repossess. With a personal or unsecured loan, however, there’s no lien on the asset, but the interest rate will be higher due to the increased risk.
Okay, now let’s get into the pros and cons.
Pros
Modify and drive to your heart’s content
Want to install a 4” mandrel-bent cat back exhaust system your neighbours will love you for? Or maybe drop it so low you need to engage the suspension bags to get you over a minimal speed bump? When you buy a vehicle, you can do whatever you want with it; modify it to all hell and drive it as much as you wish.
Free to sell it if need be
Although it’s recommended that you chat with your lender before you sell (if you’ve got a loan), you’re pretty much all good to sell it if and when you need to. It’s then simply a matter of using the money from the sale to put towards the loan and keep repaying if there’s any debt left.
It’s in your name
The title of the car is actually in your name. Even if you choose a secured loan and the lender uses the vehicle as security against the loan, it’s actually still in your name (albeit not a ‘clear title’ until your debt is fully paid).
Cons
Possible cash flow issues
If you decide to pay for the car in full right off the bat, it’ll take a fair chunk out of your savings. And unless you wipe your nose with 50-dollar notes and light Cuban cigars with 20s while noshing on Beluga caviar, it might leave you high and dry should you need emergency funds for something. Keep this in mind if you’re thinking about paying upfront.
Higher monthly payment
Compared to leasing payments, if you opt for a secured or unsecured loan your monthly repayments will be substantially higher as you’re paying off the car.
Hassles when it’s time to change over
Because it’s your car, when it’s time to upgrade to something new it’s your responsibility to put it up for sale (and experience the nightmare that is selling a car privately for yourself) or trading it in to a dealership which can in and of itself be quite stressful.
If you do have a car you’d like to trade in and want to skip the stress and hassles of doing it on your own, carconnect is here to help. Pop in some details about the car, we’ll sort out an inspection to ensure you’re getting the best price for it, and valuations will be on their way before you can say ‘Wow, carconnect offers a seriously comprehensive service!’.
Leasing a car - pros and cons
For those who are thinking about leasing their next car, like buying there are a couple of ways this can be done. If you’re planning to use it solely for personal use such as taking the kids to school, driving to/from the office, getting muddy on the weekends and the like, personal car finance is the route to go.
Using it primarily for business? A chattel mortgage, finance lease or novated lease are your options (which one you choose will depend on your particular circumstances).
Now for the pros and cons!
Pros
Tax benefits
If your employer offers novated leasing, you can take advantage of some potential savings on tax. And if you’re using the vehicle for business purposes and lease it as such, there may be tax benefits against your repayments as well. Please be sure to check with your accountant about this, though.
Upgrade to a new vehicle every few years
On a lease, it’s really straightforward to switch to something new every three or so years. Which means you’ll get to experience that new car feel (and smell!), yes, but also will have access to the very latest body/engine/tech upgrades every few years.
Lower monthly repayment
When comparing leasing against buying, generally you’ll be paying quite a bit less if you choose to lease your vehicle which can really help with monthly budgeting and overall cash flow (for your personal life or business, depending on your type of lease).
Cons
Possible limits to driving
There are some leasing products that only allow for a certain amount of kilometres per year, and if this number is exceeded you could be hit with additional fees.
Can’t sell
As the car isn’t actually in your name until you’ve fully paid it off, you’re unable to sell it without having to jump through a fair few hoops.
Modification restrictions
If you’re planning on making a few mods to your new beast, you may have to clear it with the lending institution beforehand.
Get your new car for a great deal with carconnect
If you’re ready to get behind the wheel of a brand new car, carconnect is here to help you find it for an amazing price. Search for your new car and when you find the ideal one that suits you, simply provide us with a couple of basic details and we’ll put the tender out to our gigantic dealership network. In no time at all, you’ll have each of their bids sent to you, and it’s then just a matter of picking the one that works best for you and organising payment.
Once that’s all been taken care of, you can either pick up the car yourself or we’ll arrange to get it delivered straight to you, wherever you are in Australia, or pick it up from the nominated dealer click & collect style - it’s really that simple!
And whether you’re interested in leasing or getting a secured or unsecured loan for your new car, our friends at Stratton Finance have the knowledge and experience to help you. They have a massive pool of lenders they can tap into, giving them the power to find the hottest car finance deal out there that perfectly aligns with your needs.
Note: None of the information in the above article should be considered personal or financial advice. You should seek advice from a professional such as your accountant who has an understanding of your personal situation prior to taking on financial products.
