If you’re in the market for a new car, one of the biggest decisions you’ll face is how to finance it. There are a range of options available, including buying outright, car loans and novated leases Calculator For Novated Lease. So, how do these car financing options work and which one might be right for you?



The biggest difference between buying and leasing a car is ownership. Buying a car means the vehicle is yours for as long as you like. On the other hand, when financing a car the vehicle ownership is not yours, until after the final payment (often referred to as the balloon) is made.



Buying a car outright provides you with immediate ownership over your new vehicle, however it does mean paying the entire cost of the vehicle upfront. While this option offers the benefits of no debt and no ongoing payments, it does mean putting your money into one of the largest depreciating investments you could make, when it could be used elsewhere.

A car loan is a type of finance that is sourced at the dealership and often provided by the vehicle Manufacturers financial division. With Mitsubishi Motors Financial Services (Personal), you get the flexibility of loan terms from two to seven years, repayment frequency options with an interest rate fixed for the term of the loan. You can use our simple Finance Calculator to calculate potential car loan repayments based on just the loan amount and lease term.

Along with their flexibility, car loans may also help with building a credit history, and leave money in your bank that could be used elsewhere.

A Novated lease is a form of finance available as an employee benefit. It is an agreement formed between you, your employer, and the vehicle funder. The lease payments are deducted from your pre-tax income, allowing you to pay less tax on your salary. Additionally, as a Novated lease normally includes all operational costs (e.g. rego and CTP, service and maintenance etc.) often resulting in a saving against retail price, and cash flow benefits.

Novated leases can be convenient, as the payment is deducted directly from your salary. At the end of the lease you purchase your car for the residual value, you can then decide whether to sell it (all profits over residual are tax free) and then start a new lease, or just keep the car.

When it comes to car financing, picking the right choice for you will depend on your individual circumstances, budget and the type of vehicle you want. Understanding the pros and cons is a great starting point in working out whether buying outright, choosing a car loan or (if your employer agrees) setting up a novated lease is the best option for you.

If you’re interested to learn more about our car loan options, you can find all the details on our Financial Services page.

And, for those who want to understand the car finance process and what to bring to the dealership, check our guide on How to do the finance dance.