What are the benefits of leasing a car? Is it a good Financial Decision?
- Car Finance,
- Jul 30, 2019
Buying new car isn’t that easy and no one can afford to change the vehicle more often. Also, once you buy your vehicle, arranging the auto accessories and legal documentation are quite a work to do. Even if it is your first car, you might have wondered either to buy it financially or go with car leasing? Without learning the terms and conditions of car leasing options and the direct purchasing, you might not be able to differentiate which decision is in your court. Generally, buying an old car is always better than opting for an old or a financed car. If the car you have been waited for long, is not approachable solely with your own pockets, better to lease or finance the new car than lending your hands on some old wheels.
Speaking about better to lease or buy, one should keep in mind that vehicle’s financial value goes down rapidly in first three years and it would be better to but a 2- or 3-years old vehicle. But it is much better to lease a new car as the previous driver of your old vehicle may have used it rough. Risk is always there in buying an old car while there are many companies that offer secured car financing. In car lease conditions, monthly payments are made against your income slips and this monthly deposit is convenient and less than actual payment of new car. To reach a sound decision, learn more about car financing payment.
How to make Auto Lease Payment?
Once you have selected your desired car financing category after attaining information on leasing a car, the payment procedure gets started. The car financier will first ask you to make down payment against your deal. This payment is also called as capital reduction phase in which a section of lease upfront is paid in advance and the rest payment is obtained on monthly basis i.e., the balance amount becomes easy to pay in monthly short intervals and one can pay them with salary /income amount.
How much lease can I afford? Usually the monthly payments of car financing Australia are much less than the actual price car because you only pay a portion of your financed car. The 3 year lease or 4 year lease (typically) will allow you to settle with your income to buy the valued car. Are there any pitfalls of leasing a car? Yes, if you are not fully aware of terms and conditions, then you may have to suffer with additional charges, surpass or hidden fees at the end of lease term.
Is there any limitation of leased car mileage?
Yes, usually there is a limitation on mileage of a financed car in Australia. The limitation is defined by the car leased package you have availed. It could be from 10,000 miles to 15,000 miles annually and if you go beyond the limit, you have to pay for it. The additional miles can be adjusted over mileage quota at the end, in some categories like comprehensive car financed category.
Is there any financial penalty for leased car getting into bumps or dings?
If your leased car gets some scratches, bumps, dings or its tires become worn-out and bald, either you then replace it with new tires and make repairment of all the damages. Otherwise, your final payment against car will cause to pay for it as arrears. Another option is to apply for car Insurance.
How often do I have to keep Maintenance on Leased Car?
For leased car in Australia, regular and scheduled maintenance is recommended as at the end term, balloon payments are there by adding up arrears. However, some auto finance dealers also offer the purchasing option at the residual value or turning the car in. Therefore, it is recommendable to check for the terms and conditions of car leased package including mileage limit and choice of buy - back. You should also get every maintenance requirement in documentation.
Are there any additional benefits of Leasing a Car?
Leasing a car helps you by sharing your pocket in your hard times, and lend you money and so the desired car on easy monthly payments. Also, if you are a person that want to try new models of your favorite brands, it is the best option to lease car. In this way, you will only deal with typical maintenance in 3 years auto leased duration because new cars do not require any major denting panting, and wear tear in these years while their economic value is also manageable.
What are the pros and cons of car leasing?
The pros of car leasing are:
- Low Monthly payments
- Getting new model car every fourth year
- No major repairments
While the consequences are:
- Car repayments against every salary slip
- At the end of car lease procedure, you don’t have anything against your money. i.e., it is appreciable to avail the opportunity of getting into your own wheels. But after it, you won’t even have money to move in some old car.
- If you want to continue with the car, either pay its residual value or avail another financed car on lease.
- Unexpected fee charges for car leasing such as heading more than you limit of annual car mileage, resulting into paying hundreds of dollars.
- In case of damages, arrears are there as balloon payments in final payment.
How to save money while selecting financed car?
- 1 - To save your pockets, purchase your car by writing a regular check, rather than financing it on interest and burdening yourself with over due monthly repayments procedure. With car leasing, you have to worry about your monthly payments with no money being saved at the end. Therefore, it is recommended to buy an old car from reliable retailer and take its proper care through car insurance.
- 2 - Furthermore, it is advisable to consult a mechanic before purchasing an old car or leasing a used car on finance for its good condition and healthy maintenance inspection.
- 3 - Spend plenty of time in selecting your desired model and make sure of its title status or ownership (especially while dealing with a private retailer).
- 4 - In case you are choosing car financing due to lack of your money deposits, make sure you are easy to go with monthly repayments. It shouldn’t be more than your financial capacity that turns you to discontinue the procedure otherwise. As a standard, your monthly car repayments should be less than 25% of your gross salary or current income. Less debt-to-income ratio also increases the approval chances of your loan. Otherwise, purchasing used car on lease is again a better option.
- 5 - If you are a pre-qualified car financer, check out the models and making of your next vehicle offered by the financier. In other case, you may have to fill additional surcharges against your valued car.
- 6 - Wondering to choose car finance 3 years or 5 years? It is best to choose the minimum time span for your car leasing as it reduces the overall interest rate. Buy or lease calculator smart money is also available to evaluate this factor.