Lease Or Buy a New Car In Canada: What's The Better Option?

If you’re planning to get a new car you generally have two options, to lease or buy. While each has definite benefits for people in different situations, there are specific pros and cons to each which may influence your decision.

As is our way, our auto loans team has collated what we consider the primary pros and cons when it comes to leasing or buying a new car. We hope it gives you the information you need to make an informed decision about your next new car.

Pros of Leasing a Car

• Lower Monthly Payments: A significant benefit of leasing is lower payments. Even if you lease exactly the same car as you were planning to buy, as you won’t own it at the end, the monthly cost is lower.

• New Vehicles: If you love driving the latest cars, leasing will usually swap out your old car for a new version every couple of years. This can be enough for many people to lease.

• Better Car, Same Price: As leasing is cheaper, you could upgrade the car and still save money compared to an auto loan.

Cons of Leasing a New Car

• No Ownership: Leasing is renting so you’re paying to use the car not to own it. Even though you may get the option to buy the car at the end of the lease, that’s a completely separate transaction.

• End of Lease Inspections: Anyone who has ever leased a car knows what we mean here. That condition inspection at the end of every lease is designed to part you from as much cash as the lease company can get away with.

• Not Free and Clear: Some people who lease never give it a second thought but some leasees we know remain nervous throughout the term in case they crash, damage, or otherwise reduce the condition of the car.

Pros of Buying a New Car

• You’re Buying Equity: While a car is a depreciating asset, it is still an asset at the end of the day. You’re paying to own the car rather than just use it and will end up with your name on the title at the end.

• Return on Investment: An auto loan is more expensive but you end up with a vehicle with some resale or trade-in value at the end. You don’t get that with a lease. You have the option to buy the car but that costs more.

• No Limitations: If you use an auto loan to buy your car, there are no mileage limitations or limits on customization or adding new features. It’s yours to do with what you like.

Cons of Buying a New Car

• Higher Monthly Payments: There is no doubt that buying is more expensive per month than leasing. You may end up with more at the end, but the running cost of a loan is more than a lease.

• Depreciation: Lease cars depreciate too, which is built into the monthly fee but it isn’t something you have to worry about. The loss is factored into the cost of the lease and is then for the leasing company to handle.

• Running Costs Are Yours: New cars come with free servicing and warranty but eventually, it will fall to you to pay for.

There is no ‘best’ option here, only what’s best for you in your situation. Whichever way you go, we can help.

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