Hello there, Canadians! Looking to buy your first car? Or your second? Or you third? Whatever the number of your purchase is, one question that always comes along with purchasing a car is ‘Should I buy it or should I lease it?” 

Every car-driving man and woman must face this crossroads: Car loan or lease? It's a difficult decision to make, indeed.

There are so many things to consider while making this decision. The pros and cons. The do’s and don’ts. You can practically feel the weight of indecision and uncertainty weighing down on your shoulders. How can a sane man go through this much mental mania for a single decision? 

That is exactly what prompted the creation of this blog. Read ahead and you will find out some tips to make the choice between car loan or lease a bit easier. 

Happy reading!

Leasing vs buying a car in Canada: what’s the difference?

Buying a Car

Buying a car means that you own it outright. Well, if you pay off the loan that is. If you give the entire amount lump-sum, then the car is yours to keep. 

Even if you financed it through a car loan, it is still yours once you pay off the loan. Just keep slashing off those monthly payments until the loan is paid off and voila! The car is yours to drive, and resale value yours to keep.

(Fortunately or unfortunately, seeing the state of car resale in Canada)

Leasing a car

Leasing a car, on the other hand, means that you are essentially renting the car. As you would pay rent to live in a house for a fixed period of time, you pay the owner of the car the amount of depreciation at fixed intervals for a pre-decided period of time (typically, 2 to 5 years). 

Once that period is over, you stop the payments, hand over the keys, and go home. Depending on your lease agreement, you might have the option to purchase the car.

Why or Why not Buy a Car?

Why buy a car (the pros)

• Ownership - The car is yours, no questions asked. Just make sure you pay the financing agency on time, otherwise your car is theirs.
• Unlimited Mileage - Drive your car as much as you want, as fast as you want, and as frequently as you want. Nobody will be checking your miles every month
• Customisation - All the Canadian car enthusiasts out there can have a field day, doing custom jobs on the cars they own. Add a spoiler, change the alloy, paint it purple. Whatever.
• Potentially lower long term costs - Once you pay off your loan and own the car, your monthly payments will stop, bringing down your overall expenses related to the vehicle. 
• Option to trade or sell - Got bored with the car and want a new one? Trade your current car to slash the price of the new one. You can even recover the small costs put into the car from the trade

Why not buy a car (the cons)

• Higher cost - You might end up paying more money in the form of a high rate of interest on your car loan than what you would pay on a lease agreement
• Depreciation - Your car wouldn’t always remain all shiny and glamorous, you know. Cars are depreciating assets. They lose value with time. A car that costs you 50,000 dollars might end up having a value of 10,000 dollars years later when you want to sell it.
• Long term commitment - (No Joey, I’m not talking about relationships, come back) Buying a car might not be a good idea for people who are on the fence about sticking to the same vehicle for years to come. Once you bring the car home, you’re stuck with it.

Why or Why Not Lease a Car

How is leasing better than financing (the pros)

• Lower installments - Normally, the amount you pay on lease payments every month is lower than what you might have to pay on loan installments. So if you care about your pocket, maybe stick to lease.
• No downpayment - Want to drive a car but can’t spare a big amount for a downpayment? You don’t need to. You can get a lease agreement without emptying your wallet in the name of a downpayment.
• New vehicle after every year - (Still not talking about relationships, Joey, go away) A lease agreement allows you to switch between new cars every few years. Hop on to a different vehicle as soon as the lease of the previous one expires.

No, don’t lease a car (the cons)

• No ownership - Whatever fancy terms you might want to use for a lease, at the end of the day you are not the owner of the vehicle. There will always be restrictions on things you can or can’t do with it.
• Lack of customisation - Talking about restrictions, forget about painting it purple, you won’t be able to customise most of the car without the owner’s approval. Tough luck.
• Mileage issues - A lease agreement generally includes a mileage restriction; meaning how many miles can you drive the car during the tenure of the lease. So bye-bye long drives.

What is Right For You?

Is leasing better than finance? Or is ownership better than rent? The result of the contest: leasing vs buying a car in Canada is ultimately a personal one, one which you should take carefully after considering your driving habits, budget, and long-term goals. If you’re someone who likes to upgrade their vehicle every few years and wouldn’t need to drive many miles, leasing might be a good idea. On the other hand, if you plan to keep your car for a long time and want to build equity, buying may be a better fit.

So, should I lease or finance a car? Weigh the pros and cons of each option thoroughly and make an informed choice you won’t come to regret later. 

AutoFinancingPro, a Canadian auto financing company, can make the thought process easier for you. Is it better to lease or finance a car? Their experts will tell you. Additionally, they’ll also connect you to a car dealer offering lease or financing options suiting you so that you can make a well informed decision.