Leasing a vehicle provides some great benefits.
But so too does hire purchase financing.
Which one is the better option?
The answer is that it depends a lot on your preferences and circumstances.
Here’s a basic rundown of what a lease and hire purchase are, in addition to the pros and cons of each.
Leasing
“Vehicle leasing is a finance tool where you pay a set amount each month to rent and use a vehicle.” It is a popular finance method which businesses use to acquire vehicles.
Why is it popular?
Leasing is up to 100% tax deductible as an operating expense, frees up capital and means you don’t have any capital tied up in a depreciating asset.
What are the drawbacks?
You’ve got to keep it in good condition to avoid excess wear and tear charges. You’re also usually locked into a fixed km and there is a termination fee if yo want to get out of the contract early.
Hire Purchase Financing
With vehicle hire purchase financing, the lease company funds the vehicle simply fund the car or asset by way of a good, old-fashioned finance arrangement over a period of time (usually 3-5 years).
Why is it popular?
The benefits of financing a vehicle is that you have outright ownership once you’ve paid the vehicle off. You can also customise it as you please and there aren’t any km restrictions.
What are the drawbacks?
A big drawback is how much of the car’s value you lose to depreciation. As the vehicle gets older, it also becomes more expensive to keep it on the road.
Are You Better off with a lease or hire purchase?
As we said, it depends on your circumstances. Let us crunch the numbers so you can make a decision which works for you.
People are often surprised at the financial services which Driveline offers. Most of our business is in leasing, which has a lot of tax benefits. However we do have some competitive hire purchase finance options available to get great value with every dollar you spend.
At Driveline, we don’t force you into taking one finance option over the other. Instead our approach is to help find you the right fit for what you’re buying, your circumstances at the time and where you hope to be down the track.
We’re in it for the long haul which is why so many of our clients have been with us for years and years. We finance all makes and models of cars. In addition to this, we can also provide competitive finance on a range of plant equipment, boats and more.
To find out more about vehicle leasing and financing, download our “Simple Guide to Vehicle Leasing” by clicking on the image below.
