New year, new car: should you update your lease?

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23 Dec 2016 by smartleasing

As the glorious summer days stretch out before us, it can be tempting to think big about the future and make significant financial commitments – like upgrading your car. But experts suggest tempering your ambitious summer thinking with a dose of realism. After all, we’re just passing the half-way point of the financial year and plenty could happen between now and June 30.

“The summer break is often a time of contemplation and sometimes part of that contemplation involves a new set of wheels,” says Ben Fletcher, managing director of Sydney-based accounting and business advisory firm Generate. Fletcher says that, although the summer holidays might be an attractive time to upgrade, “the focus should really be on whether or not it’s the right decision for you.”

Con Balomenos, leasing sales manager at Smartleasing, agrees, saying that timing is a matter of personal choice and should be dictated by an individual’s needs. “People may want a new lease car because they are downsizing, upsizing, their existing car has gone beyond the warranty or they’ve had the car for a long period of time,” he says.

During periods when you’re working full-time and commuting in your car five days a week, it can be incredibly tempting to fantasise about upgrading in order to enhance your experience. But the long Christmas break, when we generally drive less, can be a good time to think dispassionately about whether you really need to upgrade right now.

There are also significant benefits to timing an upgrade to coincide with the release of new-model cars rather than in the new year. “Dealers tend to do better deals on the outgoing models, so there can be savings to be had there,” Fletcher says.

However, if the New Year is the right time for you, don’t be put off by depreciation concerns, Balomenos says. These worries are often overblown and can be managed in other ways.

“It’s minor in my mind unless there is a completely new facelift and model coming out,” he says. “If it’s a matter of a plate year being the deciding factor then most strong negotiators can get good value for their car anyway. If you take good care of that car, service it, clean it, then you put yourself in a favourable position for maximum return anyway.”

The key to determining the optimum time to upgrade your lease is research. It may reveal that your upgrade can be put on the backburner until a superior model is released. Or it may confirm that now is the most cost-effective time to pounce on your ideal car.

If it’s the latter, start by reading reviews to get a good sense of a car’s pros and cons. Talk to friends or workmates who drive the cars you are considering and ask for their honest feedback. Check car valuation sites such as RedBook and CarsGuide to find out how similar models have depreciated over time.

Once your research is finished, it’s time to head to the showroom, Balomenos advises. “A lot of people will fall in love with something and narrow down their choices to one without even sitting inside that car,” he explains. “So generally you should get it down to say, three models, and go and test-drive each one. You’d be amazed how people of different heights and with different-sized families realise there’s no room for their legs or their shopping. Usually someone’s first initial pick isn’t their final one so research is very important.”

Some people give more thought to the make, model and colour of their new lease car than the timing of their upgrade. So before making your decision, it’s wise to put market factors aside and consider your finances. Assess your cash flow and savings so you can accurately plan for future leasing expenses.

Did you know...

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