Finance vs. Lease

How can we help you with purchasing your next car? It can be confusing, but doesn’t have to be. Your auto finance choices are broader than ever, with various terms, great rates, and many leasing options. Let’s take a closer look at your options for financing and auto leasing in Oakville…

Financing

When you buy, you pay for the entire cost of a vehicle, regardless of how many miles you drive or how long you keep it. Monthly payments are higher than with leasing. You typically make a down payment, pay sales taxes in cash or roll them into your loan, and pay an interest rate based on your credit score. You make your first payment a month after you sign your contract. Later, you may decide to sell or trade the vehicle for its depreciated resale or trade value.

Leasing

When you lease, you pay only a portion of a vehicle’s cost, determined by how long you own the vehicle and how many kilometres you drive. Leasing is a form of financing, but with elements similar to renting. You have the option of not making a down payment, you pay sales tax only on your monthly payments, and you pay a financial rate that is similar to the interest on a loan. You might be required to pay certain fees and possibly a security deposit that you don’t pay when you buy. At lease-end, you may either return the vehicle or purchase it for its depreciated resale value. You might be charged a lease-end disposition fee.

Lease-versus-Buy Example

As an example, if you were to lease a $20,000 car that will have, say, an estimated resale value of $13,000 after 24 months, you only pay for the $7,000 difference (this is called depreciation), plus finance charges and any possible additional fees. At lease-end, you return the car or buy it to own it.

When you buy/finance, you pay the entire $20,000, plus finance charges and any possible additional fees. You own the car at the end of your loan, although its value is less than the $20,000 you initially paid.