subject: Lease Vs. Purchase Rethinking The Norm [print this page] One of the trends of current society that has been evident for some years now, is the penchant for people to quickly discard any commodity that has become unfashionable. This extends to most household items such as furniture that is now being turned over every eight to ten years. Electronic goods are another area where technological advances are occurring so rapidly that a computer for example, purchased two years ago is already obsolete. Along with this change in consumer behaviour came a realisation that rather than purchasing items such as household appliances outright, leasing gives greater flexibility and the ability to exchange the item at the end of the term for the newest model.
Of course, the concept of leasing is no stranger in the vehicle market, but up until now, leasing a vehicle was something that only business people did. However, there have been some new developments in this area too, and new players in the market are making lease vehicles available to the ordinary consumer. While new cars have always been expensive to buy, the running costs have escalated out of sight over the past decade or so, and this especially is making leasing a very attractive option over outright ownership.
There are several benefits to leasing over buying. There is no need to have a deposit as is usual if you are buying a car through hire purchase. This immediately frees up cash which would otherwise have been committed to the purchase. Also, purchasing through hire purchase adds thousands of dollars in interest charges to the overall cost of the loan, so that by the time the vehicle is paid for, it has cost much more than its original asking price.
At the same time as the interest charges are adding to the total cost, the vehicle itself is depreciating. Studies have shown that up to 40% of the value of a new vehicle is lost through depreciation within three years of purchase. An owner can literally drive their just purchased brand new vehicle out of the showroom, do a couple of laps and bring it back to be resold and it will have lost hundreds of dollars off the value. Once it has a few kilometres on the clock, it is a second hand car, and is valued as such.
Some car lease Brisbane companies are offering leasing terms that include major running costs such as insurance, registration, tyre replacement and servicing in the regular lease payments. This means that by leasing a vehicle, provided the lease payments are kept up to date, there are no bulk amounts of cash to find when the rego comes in or new tyres are needed. Of course, this does not include fuel, but having these other expenses included in the lease payments is a major assist to the budgeting process.
The terms of lease agreements may vary between providers, but generally, for a vehicle, leasing is a much more cost effective proposition than buying. It also gives the driver the option to buy the vehicle at its residual value at the end of the lease, or hand it back and drive away with a new one. Talk about keeping up with the Joneses!
