Leasing VS Ownership

January 22, 2021



Here’s a simple summary of how vehicle leasing works.

Leasing a vehicle generally involves making an initial monthly payment. The customer then makes monthly payments to the lease company until the end of the term. At the end of the agreement, the customer does not own the vehicle.

The lease payment may include all servicing, insurance and maintenance of the vehicle for the term of the contract (Operating Lease), otherwise, the customer may be responsible for those costs in addition to the lease payment which only covers the actual vehicle (Finance Lease).

At the end of the lease term, the customer will have several options, which may include:

• extending the lease on the existing vehicle or updating to a new vehicle
• ending the lease and returning the vehicle
• buying the vehicle as a used vehicle from the lease company

Customers should ensure they understand upfront who is responsible for the payment of any residual value which will be due at the end of the lease.

Pros / Cons of Leasing

• Possibly a lower monthly payment compared to buying/owning a new vehicle
• Good if the customer wants to upgrade vehicle every few years
• Operating lease provides peace of mind knowing there will be no additional vehicle costs incurred

• Depending on the lease agreement there is the possibility of additional charges at the end of the lease for vehicle damage that is deemed outside of “fair wear and tear” or for additional kilometres travelled. Make sure to read the terms and conditions before you sign!
• The customer may be responsible for the residual value even of the vehicle is being returned
• When an end of term purchase option is provided, the total cost i.e. including lease payments made, may not be any less than if the vehicle had been purchased and financed via a loan/CHP from day one

Loan Agreement

The option that allows you to treat your ute like a ute. The customer owns and depreciates the vehicle whilst making monthly repayments over the agreed term.

Pros / cons of a loan agreement


• More flexibility with the term of the finance, possibly allowing you to spread the purchase price of the vehicle across a longer period
• Ownership of the vehicle from the start
• No additional cost or payment required at the end of the term with respect to wear and tear or on the vehicle or kilometres travelled


• Upfront deposit requirement may be higher
• All running and repair costs are paid by the owner

Get in touch

For more information about financing your next ute or vehicle call the team on 0800 727 101 or talk to your local broker.