According to statistics from the Federal Chamber of Automotive Industries, last year, the new vehicle market grew by 2% from 2015. Thus, the market reached 1,178 million, becoming another record. As of August 2016, the most preferred brand was Toyota, as shown by this ranking. You can well imagine that leasing contributed to the said record.
What exactly does car leasing mean and why would I be interested?
It is true that for many people, the topic of leasing is still somewhat obscure. Think of leasing as a long-term buying process: instead of buying the car immediately and spending much-needed money, you pay for it each month. This way, it is more of a rental, but you will own the car at the end of the lease.
Let us touch some of the most vital aspects regarding car leasing.
It can save you serious money
Buying a car with the full price upfront can be either a severe hole in one’s budget or an impossibility. Of course, it all goes back to your salary. By leasing a car, you will be paying a monthly fee to the lessor. A monthly payment can have a gentler impact on your finances as opposed to a direct purchase.
How does it work?
A lease is basically a contract between you (the lessee) and the lessor, which is the owner of the car. It is very similar to getting a loan, except that you are making monthly payment for a physical item you are allowed to use.
Type of lease
An “operating” lease is basically a rental contract. You pay for a certain period of time and then hand the car over. A “finance” lease is the one you take when you wish to buy the car.
It is more feasible that buying the car
For example, you will be able to drive a car for which you couldn’t have paid the full price. Moreover, depending on the interest rates of the lease, you might end up paying a lower price for the same car.
Does credit score matter?
Fortunately for some and unfortunately for others, yes, the credit score does matter. Most lessors usually require around 600 credit points to grant you the lease. If they do give it to you, they may ask for some higher monthly payment. As with anything else, there are ways of leasing a car with bad credit, too.
The novated lease
What does novated lease mean? If you are an employee, you can get your employer to pay your monthly lease fee out of your before-tax wage. It goes without saying that this is extremely beneficial for your pocket – and for the pocket of your employer, as well: your taxable income is reduced.
The 2016 Motor Vehicle Census shows that on January 31st, 2016, there were 18.4 million registered motor vehicles on the territory of Australia. Surely, you can contribute to its growth. Did you ever lease a car? If not, would you do it?