Should Canadians lease an electric vehicle?

Should Canadians lease an electric vehicle?

Posted on June 13, 2022

Prior to making a final decision, Canadians who are contemplating the leasing of an electric vehicle must consider several key factors.

Auto leasing is one of the most misunderstood financial products in the world of auto financing, despite its long history. The purpose of this article is to explain how leasing works and whether it makes sense for you.

Leasing versus buying

One of the most common misunderstandings among consumers is that leasing is a form of long-term car renting. Although it may appear that you are renting, there are complexities to consider.

When renting an apartment, you pay the monthly rent and that's about it; at the conclusion of your lease, you have the option of extending it or moving to a new location.

The quantity of driving you do with the vehicle is one of the specific obligations that come with leasing a vehicle.

When you lease a vehicle, its status changes from new to used; the perceived worth of a used car depends on its general condition and usage.

The higher the mileage, the lower the vehicle's worth; nevertheless, it is difficult to evaluate the value of a used electric vehicle because the market is so young.

Upon signing a lease for a gas-powered vehicle, the estimated resale value at the end of the lease is provided.

If you wanted to purchase the vehicle entirely, you would need to spend this much; this number is easy to forecast due to almost a century of gas-powered car purchases.

Calculating the resale value of an electric vehicle is more difficult; it is a trial-and-error procedure. If you are leasing a vehicle, the resale value may not be accurate, which could cost you more money in the long run.

To lease an automobile, strong credit is required

Contrary to popular belief, a better credit score is required to qualify for a car lease than a car loan.

When you obtain a car loan, the lender does not expect you to return the vehicle. Instead, they provided the loan based on the conditions of your agreement, making the underwriting for this loan more flexible.

When leasing a vehicle, the car is returned, thus the lender must ensure that only the most responsible individuals are permitted to lease their vehicles. To qualify for a lease, your credit score will need to be in the 600s or low 700s.

If you plan to drive frequently or have ordinary credit, you should purchase a vehicle instead of leasing one.

This is not a decision you should make on your own; instead, you should visit a local car dealership and examine the available auto loan options.

The dealership will assist you in securing an excellent auto loan and will allow you to test-drive all available EVs until you select the one you adore.

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