Buy Or Lease a Car In Canada: Which Is The Better Option?

If you’re looking for a new car, the choice between buying or leasing a car can be daunting. Each has its pros and cons and will be more suitable for some situations more than others. Today’s post is going to explore the benefits of each so you can make an informed decision about the direction you take.

 

Once you do make up your mind, our team can help with both. We have a dedicated leasing and auto loan team here so can assist whatever you choose!

The Pros of Leasing a Car

Car leasing is incredibly popular in Canada because it can offer significant benefits.

 

Those benefits include:

 

• Lower Monthly Payments: As you’re only paying for the lease and not the asset, your payments should be cheaper. How much cheaper depends on the type of car and its resale value once the lease is up.

 

Always Something New: If you like driving the latest cars, leasing is an accessible way to do that. You’ll get a new car every 2-3 years and will always be driving the latest models.

 

• No Maintenance: As the car is new, there will be zero maintenance for the lease. Some deals also include maintenance should you lease for longer so there are no unexpected expenses to contend with.

 

• No Need to Sell: However you go about it, selling your old car can be a real hassle. You have to be available for inspections and test drives, you have to haggle with buyers and put up with test pilots and timewasters. No such thing as leases!

 

Cons of Leasing a Car

Car leasing also has downsides:

 

• No Ownership: You’re paying a significant amount per month but own nothing. You’re renting the car and will end up with nothing at the end.

 

• Limited Mileage: Most leases have mileage limits that incur a penalty per mile once you exceed it. If you drive a lot, this can work out to be quite expensive!

 

• End of Lease Fees: Some leasing companies have better reputations than others when it comes to returning the lease car. Some will charge you for every little thing and try to get away with high fees. Not all do though.

 

The Pros of Buying a Car

There are also significant upsides to buying your car instead of leasing it:

 

• Car Ownership: Leasing is renting. Buying means you’ll own the car at the end and will have an asset to show for it. You can leverage that asset for future purchases or do whatever you like with it.

 

• Good Value: While more expensive per month and in total, having an asset at the end means that extra expense is actually worthwhile if you can afford it. The longer you plan to keep the car, the better value it offers.

 

• No mileage Limits: Most leases will come with mileage limits to help preserve the resale value of the car. If you exceed that, you could be liable for excess mileage fees which are usually charged per mile.

 

• No End-of-Lease Inspections: Buying means never having to go through one of those dreaded end-of-lease condition inspections. Not all of them are ordeals but some of them certainly can be!

 

• Trade-In Ready: Owning the car at the end of the auto loan means you’ll have something to put towards the next one. Depending on the age and value, that can significantly reduce the amount you’ll need to borrow with a car loan.

Cons of Buying Your Car

It isn’t all good news for buying a car though.

 

• Cost: car loans will be more per month than a lease. The advantage is that you’re paying for an asset you’ll get at the end but you still have to find that money somewhere.

 

• Down Payments: While many leases require an upfront payment, you definitely want one with a car loan. If you’re not in a position to save, this can be problematic.

 

• Additional Costs: While new cars come with warranties and free servicing, there will come a point when you have to pay for it. Depending on the car, that can add significantly to the cost of running the car.

 

 

There is no ‘perfect’ option here between buying or leasing a car. Just the option that’s right for you. If you like driving new cars, leasing may be your best bet. If you prefer to pay for something you own or plan to keep the car for a long time, buying may be best.

 

If you're ready for a car loan in Southern Ontario, we'd love to help with that! simply fill in the form below to get started.