102015May

Lease VS Purchase

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.

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