Different Leases?

[JB]

Not an area I am overly familiar with, so I hope you guys can answer my questions.

I currently run my T on Lease over 5 years which is about $740 pm. Approx 35% residual.

A mate of mine has just bought a new car around the same price as the T on Hire Purchase, costs him around $800 pm over 5 years and he owns the car outright at the end? Basically in comparison the interest and repayment are around the same.

With the depreciation of the T am I better off going HP so I don't have to wait 3-5 years to get what I owe on the car?

Hire Purchase sounds like it makes more sense as for a little bit more money you actually end up owning the car and do not have to sell or find a lump sum at the end?

As Pauline Hanson says, Please Explain?

[Falchoon]

Depends on if you can/want to afford the extra $60 a month. There's pros and cons for both scenarios. With your lease, you can just hand the car back after 5 years and sign up for another new car and not have to worry about trying to sell the car or trade it in. Or you can got to the bank and apply for loan (if you haven't got $17K or so already in your savings account!) to pay out the residual and then own the car (bank might want the car as security so you mightn't actually "own" it until this new loan has been paid out). Residual is based on the approx value of the car after a certain period of time.

Your mate just pays his $800 each month and after 5 years he might decide he wants to upgrade. So he advertises his car for sale, waits at home all weekend for phantom buyers that ring up and never come around and the ones that do show up are dreamers or tyre kickers. Or he could just trade it in at the car yard on a new/used car. Or he can just keep it and continue to have 'safe & happy motoring' as Dr Z and Saleen1 say. :lol:

[newxr]

hi

HP is better for two reasons

1. You can choose to have no residual or some residual however there is no GST on the residual. With lease the residual attracts a GST. You figures do not add up - interest rates are likely to be different as with 35% residual and GST later your payments should be less than 740 when compared to 0% residual and no GST for 800.

2. You can payout the HP at anytime - say after 2 years you decide to change cars you can have the HP payed out a lot easier than lease and also no GST whenever you decide to change no matter after the amount owing.

Problems with HP - None really except that technically you are driving a "hired" vehicle and some insurance companies are a little fickle. Also if you intend to mod the car much cheak with credit provider again some can be a little fickle

newxr

[curious]

what does that $740 per month give you????

[JB]

In my situation my company gives me X $$$ to run a car. I have my T on Corporate Hire Purchase with a 35% residual at the end.

My point is his repayments are approx $60 odd dollars more than mine PM. If I threw in that extra $60 each month out of the money I was given by my company at the end of the 5 year term I would own the car outright, and instead of having to either sell the car or come up with say $17k (35%) residual I would actually be pocketing the $17 when I sold it.

[sharkey]

With a lease you are basically renting the car. So you finance the total cost of the car including GST and then you have GST again on each lease payment (because it's a service). With a HP you are paying off the car over a period of time, so you are only hit with GST once.

With HP you can claim depreciation on the car.

With a lease you claim the cost of each lease payment as a tax deduction, not the depreciation.

I used to lease before GST, now I HP. In the long run it doesn't seem to make a huge amount of difference financially or regarding insurance or early pay-out etc.

[JB]

what does that $740 per month give you????

My T! :lol:

[JB]

With a lease you are basically renting the car. So you finance the total cost of the car including GST and then you have GST again on each lease payment (because it's a service). With a HP you are paying off the car over a period of time, so you are only hit with GST once.

With HP you can claim depreciation on the car.

With a lease you claim the cost of each lease payment as a tax deduction, not the depreciation.

I used to lease before GST, now I HP. In the long run it doesn't seem to make a huge amount of difference financially or regarding insurance or early pay-out etc.

Sharkey is HP geared the same way as a Lease, in terms of the interest is pretty much the component in the first 12-18 months then you eat away at the Pricipal amount?

[sharkey]

Sorry JB, I don't know exactly.

[Blown BA]

what does that $740 per month give you????

A plain white T :lol: