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Leasing or financing, how do you figure it out?

In the automotive world, the question of whether to finance or lease your next vehicle is undoubtedly complex and a source of anxiety for many new-vehicle buyers. Unfortunately, there is no easy answer and ultimately, what you do depends on your specific situation.

finance or lease

Financing

No question, it is more expensive to finance a vehicle that to lease it when looking only at the monthly payment. On the other hand, other factors need to be calculated, and more importantly, we must take into account that the vehicle will belong to us at the end of the contract. Therefore, we can use it to buy another vehicle, or simply enjoy a paid-in-full means of transportation. When leasing, you need to add the residual value including the cost required to finance that amount if need be before being able to say that the car belongs to us. Often times, the interest rates will be lower on financing, which is another advantage.

Also, it is sometimes easier to negotiate the price of a vehicle that we financing compared to a vehicle that we are leasing. And of course, there are no mileage restrictions when financing and you can drive as far as you want without any penalties.

‘The main thing about financing is that you are paying for something you will own in the end. That is appealing for many consumers who don’t mind the extra amount added to monthly payment’, says a sales representative at Ogilvie Subaru.

Leasing

Now, we must also remember that the cost of ownership, particularly when it comes to repairs, will probably be lower when we are leasing. That’s because the car is under warranty for the entire period of the lease (most often), and then we give it back. So in 4 or 5 years when the problems may start to creep in, we no longer have to deal with that.

Also, the monthly payment will be lower which may mean that you can buy a nicer vehicle. And, if you like to change your vehicle, you are not punished for depreciation in three or four years. Finally, there are also some tax implications that usually offer higher deductions for leased vehicles.

In summary, and yes, this is a very general summary, leasing will be better suited to those who like to change their vehicles often, who do not travel more than 16 000 to 24 000 kilometers per year, and who own their business or use their vehicle for work (to a certain extent).

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