What’s Hot or Not? Lease vs Purchase You’re shopping for a car, you know which colour and model you want, but one constant question everyone seems to have an opinion on is, how should you pay for a vehicle? Financing may require a $500 monthly payment, whereas the same vehicle could be leased for $300 a month. The dilemma with leasing a vehicle is that you will always have a monthly payment. Here is a breakdown of the different between leasing and purchasing a vehicle.
LEASING A VEHICLE
|Ownership||You pay to use the vehicle for the duration of the lease term and must return it once the term is over.|
|Payment||Monthly lease payment may be lower than monthly finance payment because you are only paying for the portion of the vehicle’s value used during the lease term.|
|Mileage||At the beginning of your lease term, you have a variety of mileage to choose from to meet your needs. If there are any excess kilometres used, you are responsible for the charges, unless you decide to purchase the vehicle.|
|End of Term||At the end of the lease term, you have the option of purchasing your vehicle at a predetermined price or returning it.|
PURCHASE A VEHICLE
|Ownership||Once your financial obligations are met, the vehicle will be yours to keep.|
|Payment||Monthly finance payments may be higher than the monthly lease payments because you are paying for the entire purchase price of the vehicle.|
|Mileage||There is no limit as to how much kilometres you wan to drive. Keep in mind that a higher mileage will lower the vehicle’s trade-in or resale value.|
|End of Term||You own the vehicle at the end of the loan. It is yours to keep or you can decide to trade-in for a next vehicle.|
After a few years, there should be equity in the car above the balance of the loan, which can be used towards a down payment on your next vehicle. With leasing, you will pay a premium value over your lifetime for a lower monthly payment and very few concerns about dependability. With a purchase loan, it is advantageous because you will be debt free if you can commit to proper maintenance and resist the urge to upgrade frequently.