Leasing vs Buying
At almost 50 percent of new vehicles on the road are leased vehicles. This is up from 40 percent at the same time last year.
So what is driving people towards leasing and not buying. Let's look at pros and cons when it comes to buying vs leasing. Number one factor consumers lean toward leasing is lower monthly payment. With leasing your monthly payments are way lower. If you were to purchase the vehicle your monthly payments can be $500 per month where leasing same car could be as low as $300 per month. Don't be fooled by the low monthly payments. Leasing is the most expensive way to finance a vehicle.
When purchasing a new car consumers pay around 20% in taxes and fees above the sticker price. It is GST, provincial sales tax, battery tax, tires tax, air conditioning tax and registration fees that make us Canadians most taxed consumers in the world when it comes to buying cars.
You must be aware that when your contract expires (lease
expires) you own nothing. You do not own the vehicle and you walk away from
it same as if you were getting off the bus. The lease payments are nothing
but rental fees. Yes, you do have option of purchasing the vehicle, be sure
that this price is set in the contract at the beginning of the lease (this
is called closed-end lease). Additional charges also include:
- Wear and tear - this is where the mystery kicks in. Nobody can really determine what normal wear and tear is and this is determined by the leasing company.
- Excessive wear and tear - this is more obvious. You will be expected to pay for any broken parts, missing parts, damaged seats or flooring, cracked windshield or windows, tires, wheels etc.
- Early termination of your contract - Find out what the penalties are and make sure you are aware of the costs.
- Extra kilometre charges - When leasing you are allowed only a certain number of kilometres per year (usually around 20,000 km, more kilometres can be negotiated and included in the contract). Charges for extra kilometres can also be discussed but usually run at around 15-20 cents per km.
To conclude the above article, compare all costs before signing a lease, and as always, if you're not sure - ask.
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