LEASING FAQ's
Why would I lease a car rather than own a car?
Leasing allows you to drive a car without paying out a lump sum to purchase, which means you have cash for other purposes. The low deposit, the tax advantages, and no risk on resale also make leasing an attractive option.
Does leasing a vehicle give me a tax benefit?
Depending on your individual or business circumstances, leasing a vehicle can provide considerable tax advantages. In most cases the lease payment will be fully tax deductible. Your accountant or tax adviser will be the best person to give you advice on this.
Can I lease a used vehicle?
Yes, but there may be limits on the term of the lease. Generally, only late model, low kilometre vehicles will be considered.
Is maintenance included in my lease payments?
With an operating lease, you can choose to include service costs and tyres, or you can have a non-maintained lease where you pay these costs yourself.
What's the difference between a lease and an operating lease?
At the start of a lease, the expected residual value is set (what the vehicle will be worth at the end of the lease). At the end of a lease the vehicle is usually sold, and this may be for more or less than the residual value. With a lease, if the sale price is less than the residual value, the lessee pays the difference to the lease company. If the sale price is more than the residual value, the lease company refunds the difference. Under an operating lease, the lease company takes any profit or loss on the sale and the lessee is not involved at all.
What is sale and lease back?
This is an option which allows you to inject cash into your business by selling your vehicle to a lease company and then leasing that vehicle back from the company.
If I have the money, why is making a regular monthly payment more attractive than paying cash to buy a car?
Because with leasing, all your costs, including depreciation, are known. You can also avoid having cash tied up in a depreciating asset and put it to productive use.
Can I purchase the lease vehicle at the end of the lease?
You may be able to negotiate to purchase the lease vehicle after the lease has expired. However, this cannot be arranged at the start of the lease.
How is the lease rate calculated?
The lease rate is based on the purchase price of the vehicle, the anticipated resale value (residual value) of the vehicle and the term of the lease. The anticipated kilometre usage is agreed on to determine the residual value. Most leases are for a 36 month term but other terms are available.
