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To lease or take out a loan?

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  • 30-08-2003 9:02pm
    #1
    Cork
    Registered Users Posts: 3,924 ✭✭✭


    Leaving out tax and VAt considerations:

    Which is cheaper to lease or take out a loan for say a car?


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    #2
    Victor
    Registered Users Posts: 78,370 ✭✭✭✭Victor


    If you are say taking a 2 year lease on the car, the company will then take back the car and have something left. Therefore I suspect this would be marginally cheaper.

    However, I think it will be down to the individual deal you can strike with any potential vendor / financer. You will also need to take into account the fire / theft part of the insurance.

    I presume you know you can write off leases (and lease to purchase) very quickly taxwise.


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    #3
    rachel
    Registered Users Posts: 357 ✭✭rachel


    Do you mean lease from a financial institution rather than from a hire car company? If not then ignore the below.

    I work in a large well known lending institution, so while i'm not 100% sure if this is the norm across the board, I'd imagine it can't be too different to what most companies are offering at the moment -
    leasing is actually slightly cheaper at the moment.
    At the end of a lease agreement you cannot just return the car unless of course you are majorly in arrears and the car is repossessed.
    Instead you get a LAD form which basically gives you 2 options - to either terminate the lease and take full ownership of the car or else continue the lease into a secondary rental period and pay an annual renewal while the car remains on the fin insts books rather than on your own. This applies more to businesses than to consumers.
    With a lease at the beginning the lender would pay whoever was selling the vehicle rather than paying the cash directly into your account so an invoice is necessary.
    For the lenders a lease is basically a more secured form of finance, they would still have a hold on the vehicle.

    With a loan, if approved for it, the money would be paid directly into your on account so technically you can do what you please with it.
    There is also the option of a residual lease taken out between yourself, the fin inst and the dealer which basically involves the dealers buying back the vehicle at the end of the lease for an agreed price.


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