Leasing vs. Financing

Which Is Better—Leasing, or Financing?

What are your goals? We all have different priorities—in cars, life, and finances. When deciding on leasing vs. financing, what's right for one person can be totally wrong for another. Generally, leasing offers lower monthly payments than financing as well as the benefit of owning a new car every two or three years. However, financing offers its own set of advantages.

Luckily, we have a team of finance experts who are able to assist in finding the best option for you. Call us at 905-560-2020.

Is Leasing Better for Me?

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You Want:

  • To drive a new car every two or three years
  • Lower monthly payments
  • The latest safety features and a car always under warranty

You Don't Care for:

  • Trading in or selling used cars privately
  • Building ownership equity

You Have:

  • A stable, predictable lifestyle
  • An average number of miles to drive
  • No problem properly maintaining your car

If this sounds like you, then leasing may be the best option for your needs.

Is Financing Better for Me?

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You Want:

  • To build up trade-in or resale value (equity)
  • Complete ownership of your car
  • The feeling of being payment-free after paying off your loan
  • The freedom to customize your car
  • To drive your car for a long time

You Don't Mind:

  • Unexpected repair costs after your warranty has expired
  • Higher monthly payments

You Have:

  • To drive more-than-average miles
  • Possible lifestyle changes in the near future

If you prefer to own your vehicle outright, and plan to own for the long-term, then financing will be your best option.

Leasing VS. Financing Cost Comparison

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Short-Term Cost

For the same car, same price, same term, and same down payment, monthly lease payments will always be 30%-60% lower than loan payments. This is still true even when compared to 0% or low-interest loans.

Medium-Term Cost

The medium-term cost of leasing is about the same as the cost of financing, assuming the buyer sells or trades his or her vehicle at loan-end and the leaser returns his or her vehicle at lease-end.

Some comparisons sometimes show that financing can cost a little less than leasing due to fewer fees, lower total finance costs, and the assumption that a purchased vehicle will return full market value if it is sold or traded at the end of the loan.

However, when the benefits of wisely investing monthly lease savings are considered, the net cost of leasing can be less than financing.

Long-Term Cost

The long-term cost of leasing is always more than the cost of financing, assuming the buyer keeps his vehicle after loan-end.

If a buyer keeps his car after the loan has been paid off, and drives it for many more years, the cost is spread over a longer term. That means the cost of buying one car and driving it for ten years is less expensive than leasing or buying four or five different cars over the same period.

If long-term financial cost savings were the most important objective in acquiring a new car, it would always be best to buy the car and drive it for as long as it survives, or until the cost of maintenance and repairs begins to exceed the cost of replacing it.

However, many automotive consumers have other more immediate objectives that are more important than long-term cost savings.