Renting vs Buying a Car - Thoughts?

LAlinazarali on 16/10/2020 - 09:48
Last edited 16/10/2020 - 10:36 by 1 other user

Hi all,

Newbie to both Oz (Just before Covid) and OZB - Wanted to get your thoughts on my current decision making process around continuing to rent or purchasing a car. I currently rent a Hyundai Tucson (2019) from Apex Car Rental on their subscription plan at $650 a month, excess is $500 - This is rolling and I've had it for 3 months so far. I recently started looking into purchasing the same vehicle and the various methods of financing.

Car Finance: ~ $600 pcm
Novated (non maintained): ~$550
Novated (maintained): ~$1050

Considering the flexibility and the fact I don't have to worry about insurance/rego/servicing costs with the rental it seems to me that the rental makes more financial sense?

Thoughts?

EDIT: Should have probably added I'm basing this on being in Oz for another 3 years as that's when the visa expires .

Poll Options

  • 2
    Rent
  • 36
    Buy
Automotive Car

Comments

  • ChunkyToast on 16/10/2020 - 10:02

    Is the novated lease cost noted above pre salary sacrifice ?

  • DannyC on 16/10/2020 - 10:07

    Considering the flexibility and the fact I don't have to worry about insurance/rego/servicing costs with the rental it seems to me that the rental makes more financial sense?

    Depends on your usage I guess and current lifestyle. Considering that many of us would keep a car for medium to long term. But once you factor in the rego n on-road costs, servicing/maintenance & insurance costs then I guess it makes more sense in renting in the short & medium term.

    Though I think for medium & long term (5+ years) makes sense to own your own car and to call it your own and being able to re-sell later down the track to recoup some costs etc etc. But thats just my opinion.

  • JimB on 16/10/2020 - 10:12
    +2

    'Considering the flexibility and the fact I don't have to worry about insurance/rego/servicing costs with the rental it seems to me that the rental makes more financial sense?'

    If you were in Australia for 12 months, then it makes sense for a long term hire.

    If you still need the car after 3 years, then it doesn't. Apex isn't a charity. In your case, cut out the middleman and just own the car (through cash or novated lease).

    This seems to me like rent to buy whitegoods.

    • Cyphar on 16/10/2020 - 11:19

      (through cash or novated lease)

      You don't own the care on a Novated Lease unless you pay the balloon payment at the end of the term. Otherwise you hand it back or swap it over

      • JimB on 16/10/2020 - 13:46

        true, but most people will payout the balloon or trade it in because the balloon is usually much lower than market value.

  • boomramada on 16/10/2020 - 10:27

    Nothing new here, people have done Phd's on this topic (search ozb or whirlpool) and buying is always the winner. Unless you like swapping new cars every so often.

  • nephilim on 16/10/2020 - 10:31
    +1

    $1000 a month on a 30k car, ouch
    You would pay more then the 2nd hand value after a year and a half.

    If you really need a SUV and want to minimise money lost, why not just get a MG SUV for 20k or something? Atleast will only lose 6-7k when you sell it in 3 years.

    • Archi on 16/10/2020 - 11:32
      +2

      That's IF you can sell it

  • Seraphin7 on 16/10/2020 - 10:42
    +1

    The point of the subscription models is that at the end of the time, you simply hand the car back. There's no needing to pay out a balloon or sell/trade in the car to get into a newer model and obviously you don't have to deal with rego, insurance, and servicing on the way through as you outline.

    The question then is simply one of total cost. Here's a rough guide …

    The Tucson seems to be about $30k new. Insurance, rego and servicing will likely run you $2-3k per year. In three years time, I'll assume the car is worth $15k on sale. You've also not had use of the $30k upfront cost, but I'll ignore that opportunity cost here. Therefore, over three years, I'm estimating the car costs you $21-24k.

    The rental costs over three years are $23,400 ($650 * 36). So the costs are about the same. The swing factor here is going to be your end sale price (and whether or not you want to be dealing with that). Obviously if you can pull $20k out after three years, you'd be that much better off buying. If you can only achieve $12k, the rental seems to be the better way to go.

  • bobbified on 16/10/2020 - 10:52
    +2

    EDIT: Should have probably added I'm basing this on being in Oz for another 3 years as that's when the visa expires .

    That's over $21K to rent and operate a car for 3 years!
    You could easily own one for that money. If you buy your own, you can sell it when you leave the country to recoup some of the money.

  • Mechz on 16/10/2020 - 10:55
    +4

    Have you considered car share schemes like GoGet etc? If you don't need it every day of the week this is a pretty good option.

    Also Carnextdoor.

  • Cyphar on 16/10/2020 - 11:18
    +2

    I would spend $2k - $3k on a maintained 1990;s Toyota Camry instead. Those are absurd prices to pay for your short time here

    BUT if you had only those 3 options, then unless the Apex car rental includes all maintenance, the non-maintenance lease option would be best. If the Apex one is fully maintained, then that is best.

    • YRT on 16/10/2020 - 12:18
      +3

      https://www.vicroads.vic.gov.au/registration/limited-use-per…

      If the car is a weekender, club permit allows 90 days of use each year. This may work out well for some; rego (permit) would be <$200, comparing to $800 for standard rego in VIC; comp insurance would probably cost ~$100, versus $1000.

      • netjock on 16/10/2020 - 13:34
        +1

        You need to be member of a recognised club. Not sure how much it costs to be a member but you need to factor that in also.

  • Cheeper on 16/10/2020 - 13:07

    Renting, you have zero at the end of the rental. Own, you have something of value.
    With the sort of money you are mentioning you must be looking at expensive cars?
    Servicing with regular cars is not expensive, usually an oil & filter change once a year.. $150?

  • Ughhh on 16/10/2020 - 16:59

    $650 x 12 = $7800 for 1 year, that can get you a decent car AND you own it, thus you can sell it when you leave Aust.
    $650 x 3 years = $23400, that can get you a decent brand new or near new car. You can find a decent second hand car, pay for insurance and still be ahead.

  • brendanq on 16/10/2020 - 17:07

    I bought a 20yo Audi last year for $3200 off gumtree with 170k km, mainly for driving out of the city (Melb) on wkends (when we're allowed to). Had an electrical problem with the windows and aircon and electric windows earlier in the year that cost about $1500 to fix, but otherwise I think it was a real deal. Recommend putting in some hours on gumtree (or other) and buying secondhand. It's better for the environment too :)

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