Looking for a new vehicle can be exciting, deciding whether to lease or finance it depends what your long-term objective. Do you intend to keep it for the life of the vehicle? If yes, then a loan is the best option for you. If your aim is to get a new vehicle every few years, then you might want to consider leasing. In the end, it depends on the level of ownership you prefer, as well as the financial commitment.

Pros & Cons of Leasing

When you lease a car or truck you will pay less in monthly payments than financing one. You will be able to return it to the dealer and lease a new vehicle in 2-3 years if you so choose. If you are a business owner who can deduct the expenses of the car it makes sense to lease. Plus, the car will most likely remain under warranty during your contract period.

However, you must think of a lease as a rental. At the end of the lease term, you will have nothing to show for your payments. You also need to monitor your kilometres, most leases give you maximum mileage and if you go over that, then you are required to pay for the extra kilometres.  A lease will only cover normal wear and tear, therefore if there is more than “normal” damage, per the dealer, than you will pay for those repairs. The key is to find out in detail what the dealer deems normal wear.

Pros & Cons of Financing

When you take a loan, you own the car at the end of it. Which also means that at the end of the payment term you are driving the car for free, outside of gas and maintenance. You have the freedom to modify the car as you please and drive it for as long as you want to.

On the other hand, when you purchase the car you are also then responsible for the maintenance as the car ages and will likely go beyond the warranty period. You are also paying the same amount even as the car depreciates in value. You will also have higher monthly payments for the term of your loan, but you’ll have something to show for it once you’re done paying.

The final point to think about, insurance is slightly higher for leases. Dealers will often make you pay more for third-party coverage and will push for more add-ons like a comprehensive collision.

Whatever route you choose be sure to do your research beforehand so you can drive off in a new car with ease.

If your decision is to purchase a vehicle, click here to apply for a car loan in six easy steps!

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