Should you purchase, lease or finance?
We all love scouring the market for a new car. Choosing the make and model, ensuring it has the right engine and the right kit. Some do not require much while others want as much extra gear as possible. That’s why the online car market has exploded these past years.
But once you have found the car, one major choice still remains. Do you purchase, lease or finance?
If you want to know more about the various Danish leasing solutions, you can find an overview here
It is important that you know what kind of a driver/car owner you are. In the end, your needs and dreams determine what kind of acquisition type you should go with. We urge you to consider:
Do you often want to or need to change cars?
Do you want a car for many years to come?
What is your budget? How much of your income can you spend on a car?
Once you have considered these questions, let’s take a closer look at the advantages and disadvantages of purchasing, leasing and financing when it comes to your new car.
If you are looking to buy a car
When private leasing saw the light of day in 2008, the car industry and the consumers’ idea of purchasing a car shifted. All of a sudden there were many options. Buying and owning a car still has many benefits emotionally, habitually and rationally.
There is money to be saved in buying a car cash, i.e. discounts and savings when it comes to interest. If you are looking to purchase a car that you want for more than 4 years, putting down the money is a sensible choice.
If you are looking to buy a cheap car, it stands to reason to buy it rather than lease it or even have it financed. And naturally, you need sufficient financial freedom to buy it cash.
If you are looking to lease a car
If a specific car that is hard to find on the Danish market has caught your eye, looking to Germany makes perfect sense. The German market is bigger and so is the range of cars available. If your dream-car cannot be found in Denmark, chances are you can find it in Germany.
If you know right off the bat that you want the car no more than a year or two, importing it and choosing a leasing solution is the best choice.
The same applies if you are looking at a car that costs a half a million DKK - or more. You will tie down far less cash in your car when you choose to lease and at the same time, you only have to put down approx. 40 % of the car’s price including the levy. If you write off e.g. 30 % per year, it becomes much more accessible to write off DKK 400,000 than a million.
Finally, leasing is a good solution for anyone in the habit of changing cars every year - or every other year. It is far easier to get and return your car with a leasing agreement, and you will finally have the flexibility you crave.
If you are looking to finance a car
With financing, you have several options. Many Danes still choose financing, either through their bank or a financing partner provided by the car dealership. Today, most banks offer to match the financing companies’ interest - and there are some obvious advantages in gathering all your debt in one place - at your bank.
Financing is a good match for you if you are planning to keep the car for a longer period of time, but cannot afford to put down the cash to buy it right now.
It is important that you monitor the solution to ensure that the depreciation and write offs do not surmount your debt. Otherwise, you end up owing money for the car once the financing period is at an end.
The choice is yours
In the final analysis, the choice is yours. We recommend that you take a good hard look at your financial situation and how long you plan to keep the car.
Make sure you know what you want to do. Because when all is said and done, your personal preferences determine which is the right choice for you.
If you know you want to keep your car for a long time, financing is a sound solution. If you want or need to change cars often, leasing is a strong alternative to financing. And if your financial situation, which is checked by the bank in case of leasing, turns up trumps, you are free to choose if you want to lease the car rather than finance your purchase. The same applies if you are looking to purchase your car cash.
f you want to know more about the Danish leasing solutions, click here to get to an easy overview that will help you make the right choice.