Leasing a Car vs Buying a Car

Breaking It Down

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If you’re looking for a new car, chances are you’re thinking about buying it outright or taking out a loan. However, leasing presents a great option and holds the edge of purchasing outright in a number of ways. In this article, we’ll take a look at the pros and cons of leasing vs buying a car.

Understanding how a novated lease works

It’s essential to understand how a novated lease actually works before deciding whether it’s a good fit for you, the vehicle you’d like, and your situation.

A novated lease is an agreement between you (the employee), your employer, and a leasing company (CarBon). The agreement involves you acquiring a vehicle, and making payments for that vehicle directly from your salary, before it is taxed. This can mean less taxable income each year for you, which can lead to a better result at tax time.

benefits

The Benefits of Leasing a Car

Leasing a car instead of buying it outright comes with a number of great benefits.

Enjoy a new EV every few years

One of the biggest benefits of a novated lease vs outright purchase is being able to drive a new car or vehicle every few years if you choose. This is especially appealing if you enjoy the latest EV technology, safety features, and the appeal of a new ride. It’s also a great benefit for rideshare drivers, who require a new vehicle every few years for business purposes.

Great tax benefits

Choosing a novated lease over an outright purchase (or car loan) can mean significant tax advantages. The payments for your lease will be taken from your pre-tax income, thereby lowering the amount of income that is taxed at the end of the year. The government also provides additional tax incentives for people who choose to lease an electric vehicle.

Low monthly repayments

Leasing usually means lower monthly repayments when compared to taking out a car loan, as well as avoiding interest on the value of the loan. Paying less each month means more cash freed up in your budget for other expenses, which is a great benefit if you’re trying to tighten up your budget.

Little to no upfront costs

One of the most decisive advantages of leasing a car vs buying is that a novated lease comes with minimal upfront costs. Buying usually requires at least a sizable deposit or down payment, while most leases will have little to no down payment required. That makes a new EV much more accessible, and easier to obtain for people who might not have the capital to buy at that moment.

POSITIVES

The Positives of Buying a Car

It’s important to weigh up the positives of both sides when it comes to leasing a car vs buying a car. Below are some of the pros of buying upfront.

You own the car right away

Probably the biggest plus of buying a car is that you own it outright, as soon as you’ve made payment. This means the vehicle is entirely yours, and you can do whatever you want with it, including selling it whenever you like! Owning the car outright can give you peace of mind.

You can customise your car

Owning the car outright means you can customise it however you like. That includes upgrading your sound system, adding new rims or tires, changing the colour of your paint, adding a spoiler, and much more. If you plan to make changes to your car, buying outright is a must.

So, should you buy or lease your next car?

Deciding on whether to buy or lease your new car comes down to a few factors. Ultimately, the best outcome for you will depend on your financial situation, and what you’d like to do with the vehicle. However, it’s clear that novated leasing offers serious benefits over buying a car outright. At CarBon, we’re here to help with all things EV leasing.

Get in touch with us and find out more today. Or try our online calculator.

FAQs

FAQs About Leasing vs Buying a Car

A few common queries about leasing a car vs buying.

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Can you get a novated lease without an employer?

Usually, you won’t be eligible for a novated lease without an employer. This is because the lease agreement depends on the employer making the payments for you from your pre-tax income. However, there may be some cases where you can lease your EV without a traditional employer agreement. Contact our team to find out more.

Does a novated lease affect your credit score?

Taking out a novated lease won’t affect your credit score. However, if you miss payments or default on the lease, it might negatively impact your credit rating. The good news is that all of that is handled by your employer, so it’s not something you’ll need to worry about!

Do you own the car after a novated lease?

You won’t actually own the car outright once your lease finishes, unless you pay the residual value (balloon payment), sell the car which CarBon can help you with or refinance the car if you want to keep it.

CALCULATOR

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