This is a rather popular question. Is it better to buy or lease your car? Leasing is, for many, a great alternative to buying in case they’re not quite ready for a big financial commitment. Leasing a car allows you to drive a completely new car for a fixed period of time for a certain monthly fee. Technically, you get to drive a car without owning it. However, even though the monthly rate is lower than the cost of buying a brand-new car, in the long run, it becomes unclear what is cheaper. You can easily end up spending a lot more money by leasing a car than you would if you bought it. To avoid doing that, it’s important to do some research and fully understand what you’re getting yourself into.
How does leasing work?
You pay a certain, monthly rate you previously agreed on and get a brand-new car you can now drive as much as your mileage cap allows you to for a certain period of time. This is a long-term rental since the lease period usually lasts between 2 and 4 years. After that period is over, you have to either return the car or buy it. There are a few options to choose from when leasing and they include: standard leases, leasing to own, lease takeovers and leasing a used car. All of the options have their perks and disadvantages.
There are certain websites and car pricing calculators that can help you with rapid and simple leasing in Canada.
Benefits vs. disadvantages
During the first year of owning a car, the value of the car can drop by 30 percent, so by deciding to buy, you’re willingly giving the money for something that will drop in value. The average cost of a new car in Canada is around 35 thousand dollars, while the average monthly lease payment is around 500 dollars. Two of the major benefits of leasing is that it means lower monthly payments compared to buying and that the vehicle is covered by a warranty. Also, you don’t have to think about how are you going to sell the car. Simply return it and switch to something new and different.
On the other hand, even when leasing, you can end up paying a lot more than you previously expected which is why you need to pay special attention to the fine print. There is a mileage cap defining how many kilometers you’re allowed to drive. That number is usually around 20,000 kilometers a year. You want to do your best to not go over that number because if you do, you’ll have to pay a fee that is quite high.
Leasing a car is a good option for anyone who wishes to often upgrade to newer models and doesn’t plan to drive too much. It offers some kind of flexibility that you’re not getting by buying a car but it’s only a good option if you’re sure you won’t drive more kilometers than you’re supposed to.