I am sure this depends on which country and which state you live in. I'm from Australia and the tax ramifications are quite interesting with both options. I di

I am sure this depends on which country and which state you live in. I'm from Australia and the tax ramifications are quite interesting with both options. I did all the calculations on a normal lease vs. novated lease vs. outright purchase. Since I am on the road for work and I can deduct vehicle expenses and depreciation. So it works out okay to get a new car. It is still throwing away lots of money, but because of the tax deductions it is less painful. I have taken out a novated lease, and also bought outright with finance from a bank. In the end I worked out that novated leases are a waste of money if you are able to deduct car expenses yourself. Since I only benefit from a component part of the monthly expenses being paid pre-tax. (another benefit is that you dont pay GST on any expenses). Buying outright is fine if you don't have any need for the money, but I was better off putting the money in my mortgage offset and being charged interest - that interest is deductible along with the expenses that go along with the car. Edit: Again, this really only applies to you if you can deduct car related expenses from your income tax.