Vehicle Leasing Pros & Cons

Should I buy or lease? This is a question many Ontarians have asked themselves when searching for a new vehicle. Many auto manufacturers have recently brought back the leasing option on select vehicles since taking it away in 2008. Leasing is not for everyone, and it may not work with certain lifestyles. For instance, if you own your own business or entertain clients, leasing allows you to drive a luxury vehicle for less money because of tax-writeoffs. Another example is people who like to drive a brand new car every 24 to 48 months. Sure, it does sound great, but you must be prepared to have a vehicle payment consistently as long as you continue leasing.

If you are a person who wants the most bang for their buck, buying a vehicle would make more sense, because it becomes an investment. If you can keep up with vehicle maintenance, and keep the vehicle body in good condition, it will pay off when you plan to re-sell it in 7-10 years. When you make the decision to buy, you must have the mindset of keeping that vehicle for a long period of time in order for it to make sense financially. If not, you run the risk of losing money, especially if you are financing for over 5 years.

Pros and Cons of Buying and Leasing

Advantages of Car Leasing
  • Lower monthly payments
  • Lower down payment
  • You can drive a newer car all of the time
  • Low repair costs (Factory warranty covers most repairs)
  • No hassle of reselling vehicle
  • Lower tax

Disadvantages of Car Leasing

  • You do not own the car at the end of the lease
  • You have limited mileage allowance, and if exceeded, you must pay for every extra kilometer
  • More expensive in the long run (opposed to buying a vehicle and driving it until its worth its weight in scrap metal)
  • Wear and tear charges can add up
  • If your driving needs change within a lease, it is difficult to get out of

Advantages of Car Buying

  • Pride of ownership - you can modify your car and make it as unique as you'd like
  • More economical in the long-run if you plan of keeping the vehicle for a long time
  • No mileage penalties or restrictions
  • Wear and tear only affects resale value when you are ready to sell the vehicle
  • You can sell the vehicle whenever you'd like

Disadvantages of Car Buying

  • Higher down payment is generally required
  • Higher monthly payments
  • You are responsible for maintenance costs (they can get more expensive after the factory warranty expires)
  • Increased hassle when selling or trading-in
  • More of your cash is tied up in a car, which depreciates, rather than in an investment that appreciates


So, after reading the advantages and disadvantages of both buying a leasing, you've come to a decision, right? If not, we think the best way to make a decision is to think long term. If you have the money to continue having a car payment for as long as you drive, then leasing is a great option for you. You get to save on maintenance, and drive a vehicle that is no more than 4 years old, depending on your lease terms. If you are someone that is not interested in having a vehicle payment forever, then buying is the way to go. Sure, it may cost more at first, but after you finish paying the car off, all you have to worry about is maintenance. If you are a smart buyer, you will follow the manufacturer maintenance schedule, have the oil changed regularly, and have the vehicle rust-proofed every 1 or 2 years. This will ensure your investment will be dependable for years and years after you finish paying for it. It then becomes an asset that you can sell rather quickly if your needs ever change. At the end of the day, this is a decision that should be carefully planned. If you do your homework, you will come to the right conclusion. Our Financial Services staff can also help with the decision if you have any additional questions!


Categories: Finance

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