Leasing vs Financing

 
IS LEASING RIGHT FOR YOU?

Leasing is an option that allows you to pay for the portion of the vehicle's value you expect to use over a period of time, plus a borrowing charge and applicable taxes.

The benefits of leasing
- Lease terms are shorter than most finance terms so you can drive a new car more often
- No trade-in obligations. Instead you have options at lease end.
- You may be able to drive a more luxurious model or get more features than if you financed
- You pay taxes only on your monthly payments as opposed to the whole vehicle
- You are only paying for the portion of the vehicle's value that you intend to use
- Protection from potential negative equity. Avoid the risk that your vehicle's resale value has declined beyond its projected residual value
- Protection from disappointment at trade time due to unexpected depreciation caused by; changes in technology, fuel prices, negative publicity and model changes

How leasing works:

When you buy a vehicle using traditional financing, monthly payments are based on the whole value of the vehicle plus interest. When you lease a vehicle, your payments are based on the portion of the vehicle you expect to use (plus interest) over the lease term, which can range from 24 to 60 months. 
LEASE
Leasing offers affordable payments with shorter terms

This lets you…
  • Consider vehicles with more options
  • Choose your desired trade cycle
  • Have peace of mind since most terms are within the warranty period

You have options at the end of you lease

If the vehicle is worth more than the residual value
  • Exercise your purchase option and keep it
  • Exercise your purchase option and apply the equity to the next vehicle

If the vehicle is worth less than the residual value
  • Drop off the keys and walk away (subject to any excess kilometres or wear-and-tear charges)
BUY
Conventional loans typically require longer terms to achieve affordable payments

This keeps you…
  • From trading into a new vehicle sooner
  • Driving the same vehicle longer even when you are ready to trade

Conventional loans have obligations when you trade
  • The owner must find a buyer
  • The owner assumes all of the risk for unexpected depreciation
  • The vehicle's condition, mileage, and wear and tear will be a factor in assessing the total value of the vehicle
  • The owner must satisfy the loan balance regardless of the vehicle value
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