Vehicle leasing vs Purchasing?

[Gene Simmons]

Hey guys,

In the near future I'm looking to upgrade the car.

From a financial point of view my options are:
a) Vehicle leasing through a company like for example leaseplan.com.au

or b) Withdraw from the mortgage and purchase the vehicle.

What is the best option and what are the things that I need to consider when making this decision?

Cheers

 

[Visions]

If you're borrowing for work purposes, from what I understand both ways will allow you to claim the interest as a tax deductible expense come end of financial year (with the mortgage you will need to conduct a split, so that it's easier to differentiate the car component part of it), however the interest deductible will be less on a mortgage than on a lease. On the flip side, the monthly repayments will be less with a mortgage than a lease helping cashflow, (however the mortgage will be for longer and therefore more will be outlaid in the end).

With a lease, at the end of the leasing period, you normally get an option to purchase the car outright, or you can look to lease another car if you want, or do nothing. With a mortgage, if you get rid of the car after a few years, you still have the outstanding mortgage to pay off.

 

[Gene Simmons]

If you're borrowing for work purposes, from what I understand both ways will allow you to claim the interest as a tax deductible expense come end of financial year (with the mortgage you will need to conduct a split, so that it's easier to differentiate the car component part of it), however the interest deductible will be less on a mortgage than on a lease. On the flip side, the monthly repayments will be less with a mortgage than a lease helping cashflow, (however the mortgage will be for longer and therefore more will be outlaid in the end).

With a lease, at the end of the leasing period, you normally get an option to purchase the car outright, or you can look to lease another car if you want, or do nothing. With a mortgage, if you get rid of the car after a few years, you still have the outstanding mortgage to pay off.

Thanks buddy

 

[Falchoon]

Hey guys,

In the near future I'm looking to upgrade the car.

From a financial point of view my options are:
a) Vehicle leasing through a company like for example leaseplan.com.au

or b) Withdraw from the mortgage and purchase the vehicle.

What is the best option and what are the things that I need to consider when making this decision?

Cheers

If you're earning a minimum $80k* and doing a minimum 20,000k's a lease is definitely worth investigating.

If you add it to the mortgage, make sure you increase your repayments to cover off paying the car within a 3-4 year time frame.



*Realistically 90k & 25,000 k's

 

[SteveFoulds]

I'm about to talk to my accountant about this in the next few weeks - is projected income taken into account, or just history?