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To lease or to buy?

A successful company who depends on the efficient running of their fleet requires vehicles which are reliable and safe – that some older models do not demonstrate. But before you go in search of your perfect new addition, you need to think about how you are going to finance it. This raises that age old chestnut; is it better to buy or to lease?


When you buy you pay for the entire cost of a vehicle and acquire full ownership.


  • One day you will be free of car payments (as each of your monthly payments goes not to depreciation costs, but instead to the purchase price)
  • The car is under ownership of yourself or organization (not the dealer or leaser), thus meaning the vehicle is yours to sell at any given time  
  • Unrestricted mileage without extra fees as outlined in your lease agreement


  • Initial out-of-pocket costs, as well as monthly repayments are drastically higher than when you take out a lease (about 30-60% more). These initial costs include a substantial down-payment, registration, insurance, number plates, and stamp duty (among other things
  • Many buyers often face a difficult condition when they become caught up in an ‘up-side down’ situation. This occurs when a vehicle (due to depreciation) is worth less than what the buyer still owes in their car loan
  • Responsibility for maintenance costs. As vehicles increase in age, their dealer warranty no longer becomes valid, thus expenses for major as well as minor maintenance will come out of your own pocket. Also, keep in mind the older vehicles get the more expensive they are to maintain


When you lease you only pay for a portion (the difference between the purchase price and residual value) of the vehicle; at the end of the term of your lease you either buy the vehicle at the depreciated cost or return it to the dealer.


  • Continuous replacement of your current vehicle with a later model every few years at the end of each lease. If you enjoy always being up-to-date with all the latest gadgets (not to mention improved safety features which are continuously updated in vehicles) then this is the option for you
  • Warranty is also usually included until the end of the lease term, creating peace of mind if your vehicle is compromised if it needs a major repair for whatever reason
  • Depending on where you are located, you may also be able to claim tax deductions on GST and lease charges
  • And finally, you don’t have to go through the trouble to negotiate with dealers regarding selling/trading-in your vehicle which can save a lot of time and effort


  • Leases can have many additional fees which may surprise you when they pop up. For example, extra fees may be charged for exceeded mileage, excess wear and tear, and for early termination. However these will always be in the terms and conditions so combat any surprises by reading your contract thoroughly.
  • Not considered to be owned by the lessee. Thus, it can not be counted towards an individual or organisation’s ownership equity

Some popular leasing options are below:

Operating lease
An operating lease simply means you will be able to have full use of the vehicle (under ownership of Fleetcare) of your choice for 3-5 years in return for lease rental payments without it being on your balance sheet.

Finance Lease
Similar to an operating lease, a finance lease will see you rent a vehicle from a finance company while also being able to claim tax deductions.

Chattel Mortgage
A chattel mortgage basically means that the financer will take a mortgage out on your vehicle until repayment has been made in full, however the difference to the other leases is you will immediately have ownership.

What is best for your individual needs?

A lease is most suitable if you:

  • Enjoy driving new vehicles with the latest features (vehicles usually replaced within the time-frame of 2-3 years)
  • Would like significantly lower monthly repayments
  • Want a vehicle which is almost always under warranty
  • Want lower monthly repayments

Outright purchase is most suitable if:

  • Ownership equity is important to you
  • You drive more than average miles
  • You don’t mind paying higher monthly loan repayments
Written by
Mark Schneider

Mark is a successful copywriter with over 20 years of professional writing experience.

We welcome him as a guest blogger to Fleettorque.

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