Car Leasing Vs Financing
Is it better to buy or lease a car in Toronto, Ontario, Canada?
Question: What is the Difference between Leasing and Financing?
Answer: When choosing between leasing or financing, there are many similarities as well as a great many differences. When you finance a vehicle all of the delivery charges, fees and taxes are included with the entire cost of the vehicle, and this cost is spread across the number of months you want to pay for it. Usually when a payment term is longer, the payments are smaller. A question many drivers ask is how long your payments should be stretched out, if you are planning to pay for a new car through financing.
When you lease a vehicle on the other hand, the term is usually shorter, often two or three years. The leasing company will determine the value of the vehicle at the end of your leasing term, taking into consideration the mileage, the condition, equipment, all of which is known as ‘residual value’. The difference between the complete price of sale and the residual value predicted is the basis upon which your monthly payments are calculated. Since you will typically borrow less money to lease than to finance a vehicle, the monthly payments for leasing are a lot lower.
Many Toronto drivers wonder whether financing or leasing is the right option for them. Not very many people can purchase a new vehicle with cash, and taking out a car loan to buy a new car, truck or SUV can often seem like the only option. You also have to be responsible to someone else other than yourself to pay back a loan.
Question: Leasing Pros and Cons | What are the Benefits of Leasing a Car? How does it work to Lease a Car?
Answer: When you lease there are many different factors that you have to consider. If you drive a lot in a leased car and put many kilometres on it each year, there is a risk that the mileage limits set out by the leasing company will be exceeded and you’ll have to pay extra for it. For example, if you are limited to 18,000 kilometres annually for a three year lease, it adds up to 54,000 kilometres in total. If there are 60,000 kilometres in your total mileage driven, and you have to pay $0.18 per kilometre as a mileage penalty, you will owe the leasing company an additional $720, which can equal the amount you pay for one or two months’ leasing. With damages on a leased vehicle the same principle applies, and if you return the vehicle with more damage that is considered normal wear and tear, you will be charged for the damages.
But leasing can be very beneficial because the lower monthly payments are easier to handle, and this often means that leasing a fully loaded high trim vehicle with a powerful engine can be very affordable. When you return the car back to the dealership after the lease is finished, you have the choice of buying out the car if you like, and either keeping it or having the opportunity to return it. Many drivers who lease vehicles prefer to start the whole cycle again with a brand new vehicle lease. Since leasing terms usually fall within the manufacturer’s warranty period, leasing is a benefit because no large repairs will be charged to you.
Question: Financing Pros and Cons | How does Financing a car Work?
Answer: The primary benefit of financing a vehicle is that once the payments end, you are the owner of the car or truck and you can use it for as long as it lasts. The average lifespan of a car in Canada is more than 10 years, and if you follow regular maintenance schedules many major repair costs can be avoided. Financing a vehicle is also beneficial because you are free to modify or change it in any way you like, such as change the exhaust on a sports car or paint it to represent your own taste and style. FCA offers zero percent Financing Rates on some New Vehicles from 36 months up to 84 months on select models and on approved credit. Sometimes that runs for Ram 1500, Dodge Challenger, Dodge Charger, Dodge Journey, Dodge Grand Caravan, Jeep Cherokee, Jeep Grand Cherokee, Jeep Wrangler, and other vehicles. Every Month is Different, so please give us a call to inquire about the current Month’s programs.