Lease or Loan, Which One is Better For You

Lease or Loan ?? Which one is better for you???

Lease ??

Lease is a long term agreement to

finance for a car only for a fixed

period of time..

Two types of leases are there..

Financial lease

Novated lease

Financial Lease :

It is an agreement between the

finance company and the borrower

where the finance company will

receive the lease costs and will remain

responsible for the maintenance,

insurance and taxes.

Novated Lease :

It is an agreement between you,

your employer and a finance

company where the lease rental

payment will be made by your

employer for the term of the

agreement.

Advantages of leasing:

1:Preserve Your Cash flow

No down payments are needed

Without paying any initial cost you

can get your car .

2:Lower Payments

The payments are usually low as you

are paying only the vehicle’s

depreciation value.

3:Reduce Tax

In leasing the tax payments are generally

made on the basis of your down payment

amount which is much lower as

compared to the loans.

4:Increase Flexibility

When you lease a car, there are no

worries about selling the car.

And if you want you can buy it by

paying the other remaining balance.

Dis-advantages of leasing:

1:Lack of ownership

With lease you are not permitted to

do any modifications to the vehicle as

you are not the owner.

2:Fringe benefit tax

FBT impose a vehicle mileage limit

and it will add extra charges if your

mileage exceeding the contract limit.

3:Residual value

According to your agreement you

have to pay the residual value at the

end of the lease period, no matter if

the car is worth less than the

agreement value.

4:Long term legal obligation

Once you sign the agreement , you

are bound to make the payments

even if you stop using the vehicle.

Loan ??

A loan is to finance for a new vehicle

where the buyer has to pay the cost in

terms of monthly payments.

Here you need to pay the entire cost of

the car along with the interest rate.

Advantages of loan :

Ownership

You have full authorization for

modifications as you are the owner of that

vehicle.

Dis-advantages of loan :

Security:

High repayments

Total cost of the vehicle

Interest rate

Taxes

Loan restrictions

A loan generally includes some sort of

restrictions which force the customer to

maintain the credit ratios and also it

will block the customer to borrow

future funds.

When deciding on how to finance your

new car you must consider all these

points and accordingly choose the best

option for you.

Thank You

Website: http://www.harmonymotorworks.com/