If you’re looking for a vehicle, you have two alternatives: lease or buy. Choosing between leasing an automobile and purchasing one may be more difficult than you think. In most situations, it’s not simply a case of money; there are a number of other factors to consider, including convenience, obligations, luxury, and car ownership responsibilities.

According to Statista and Research and Markets, more and more Australian drivers are embracing the idea of leasing cars. The fleet and private car lease industries are expanding gradually each year. However, a deal that allows you to drive away in any vehicle without making a purchase commitment and then trades it in for a new one after just two or three years may appear too good to be true.

What is the best way to lease a car? How much money do you have to spend on gasoline each month before leasing? What are the advantages and drawbacks of leasing vs purchasing a vehicle? More importantly, what exactly is car leasing? There isn’t any trick to it. In plain black and white, here are the basics of automobile leasing.

How Do You Go About Leasing a Vehicle?

You’re probably already aware of how to acquire a vehicle using loans or other financing techniques. However, leasing is quite different from purchasing. You simply ‘rent’ a car for a certain length of time, generally 2 to 4 years. You can renew or extend your lease after it expires, buy the automobile at its residual value, or trade it in for a newer model as desired.

Monthly lease payment is all that the car dealer or vehicle finance company demands, which can be paid by your employer, business, or yourself.

Keep in mind that you must be able to lease a vehicle. Your credit score, earnings, and employment history are all examples of qualifying factors.

Australia’s Car Leasing Market

It’s important to understand every option before deciding whether or not to rent a car. There are three primary kinds of automobile leases in Australia, each suited to certain types of vehicle purchasers.

1. Novated Lease

This is a common leasing agreement for salaried employees. It’s a three-sided contract between an employee, an employer, and a car dealer that involves a vehicle. The dealer provides the car and takes monthly lease payments from the employee’s taxable income. Additionally, operational expenses such as maintenance, fuel, and insurance are covered by deductions.

Because a novated lease is so cost-effective, it lowers taxable income and reroutes money that would otherwise be taxed toward the purchase of a vehicle. Use our Novated Lease Calculator to discover how much you may save on a lease.

2. Finance Lease

The majority of vehicles on finance leases are used by businesses. A financier acquires a car and leases it to a business in monthly instalments throughout the term. The lessee is required to pay the residual value of the vehicle and take ownership or renew the lease for another year at the conclusion of the lease term.

3. Operating Lease

An operating lease is similar to a finance lease except that the lessee does not have to make a balloon payment at the end of the leasing term. The financier returns the vehicle to him simply at the conclusion of the term.