Vehicle leasing in New Zealand

We understand that there are many factors to consider when it comes to having a car in New Zealand. Cars in New Zealand have faster depreciation compared to other countries, and car financing isn’t cheap either. Nowadays, vehicle leasing has become a popular option as drivers seek to spend less on vehicle costs. Unlike purchasing a car upfront or financing it at high interest rates, leasing is similar to renting a car for 12 to 48 months.

Vehicle leasing comes with its own set of pros and cons, as with financing a car, and the decision on whether it’s the right option for you boils down to your personal circumstances. In this blog, we’ll delve into what is vehicle leasing, the two types of leasing,  its benefits and disadvantages, and the reasons why you should lease.


What is vehicle leasing?

Vehicle leasing is a contract that allows individuals or businesses to obtain a vehicle for a fixed period of time and is charged an agreed-upon amount with the leasing company. Vehicle leases typically last for 12 to 48 months but can be longer in some cases. Once the lease comes to an end, the vehicle is returned to the leasing company.

Key benefits of leasing a car

  • Vehicle leasing is like renting a home—you pay a deposit, agree to a term, make regular monthly payments, and return the car when the lease ends.
  • Leasing companies provide new and used cars, often including repair and maintenance coverage. With new leases, you can drive a new car every few years without worrying about repair costs. You also avoid the hassle of selling the car when you want to upgrade and are not locked into monthly payments until the car is paid off, as with financing.
  • New leased cars come with a manufacturer’s warranty, while used leased cars often include a repair coverage period.

Two types of vehicle leases: operating leases and financing leases.

1. Operating leases

This represents the traditional fixed-term vehicle lease, where ownership carries on with the leasing company. If an operating lease is advertised as 36 months, 90,000km, and a full warranty, then you’ll have the vehicle for 36 months and be contracted to drive less than 90,000km.

Operating lease advantages:

  • The expense is completely tax-deductible.
  • Usually, the leasing company takes care of vehicle maintenance.
  • The lease doesn’t show up as a liability on your accounts.
  • You don’t have to spend a lot of money upfront to buy a vehicle, so you can use that money for other things.
  • Lease payments are fixed and easy to budget for.

Operating lease disadvantages

  • You need to keep the vehicle in great condition to avoid extra charges when you return it at the end of the lease.
  • You’re committed to a set term and mileage limit, so if your business needs to change, you’ll have to renegotiate the contract.
  • There are usually high fees if you want to end the lease early.
  • Maintenance packages often don’t include tire replacement, which can be expensive. Ask about the tyre package and negotiate if needed.

2. Finance Leases

A finance lease has one key difference from an operating lease, where at the end of the lease, the individual or business leasing the vehicle owns it outright.

Finance lease advantages:

  • You can avoid borrowing or investing a huge amount to buy the vehicle outright.
  • The monthly payments may work out to be inexpensive compared to car finance.
  • You may be able to claim back the GST on the lease element.
  • Depreciation can also be expensed.

Finance lease disadvantages:

  • Unlike operating leases, the costs are not 100% tax-deductible.
  • The vehicle is treated as an asset on your account and the unpaid amount shows as a liability.
  • As the vehicle depreciates, your asset is worth less each year.

So why lease?

When you lease, no deposit is needed, allowing you to save your cash and spend it on other important things. Payments can be made weekly or monthly and are 100% deductible. Plus, leasing vehicles lets you outsource maintenance, meaning you save valuable time not worrying about servicing, WoFs, road user charges, and more.

If you like upgrading to a new vehicle every three years, like the idea of someone else managing the risk of a depreciating asset, utilising partners that have access to additional discounts through larger buying power, and ultimately improving your bottom line, then leasing could be the perfect choice for you.

Looking to lease?

Browse a few vehicles lease offers we have on right now.

Things you should know

Please note that while care is taken to ensure all details displayed here are correct, specifications, pricing, imagery, and offers often change and information here may no longer be accurate. Images may also include overseas specification and/or optional accessories not included in the price or available in New Zealand. Content can also, of course, be subject to the occasional human error. For all current and correct details, please speak to our friendly and informative Sales Specialists. If you notice information that may be inaccurate, please don’t hesitate to let us know as soon as possible. Thank you for your support and understanding.

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