When we buy a new car, two types of purchase options will be offered: financing or leasing. You can also pay cash, but for this article we will focus mainly on leasing. Just like when you rent an apartment, leasing offers several advantages, but also some disadvantages.
To figure out which option is best for you, you have to determine your needs and how you plan to use the vehicle. Leasing can be very beneficial if you find yourself in one or more of the following situations.
You don’t drive that much every year
When you lease a vehicle, the automaker provides a range of maximum mileage that you can travel annually. Usually varying between 16,000 and 24,000 kilometers, you cannot go over this limit otherwise you will have to pay an additional amount at the end of the lease which can be quite significant. That said, if you do not travel a lot of kilometers every year, leasing is generally more financially advantageous.
You have a business or you use your vehicle for work
The government generally gives more deductions and more tax benefits when a vehicle is leased. You can deduct part or all of the payment amount, for example. Often, if you use a vehicle for your job or buy it for your business, it is more tax-efficient to lease it.
You like to change vehicles often
If you’re the type to change vehicles every three or four years, a leased car is probably the best option. If you buy your vehicle, it will suffer a significant amount of depreciation in the first few years of ownership, so you have to keep it for a long time if you want to cut your losses at the time of resale. With a leased vehicle, simply give it to the dealer at the end of the lease and buy a new vehicle.
Thank you to Halton Honda for their advice.