To lease or not to lease a vehicle? Unfortunately there isn’t one clear answer to this question! Everyone has different vehicle preferences and needs and like everything, there are pros and cons when you’re looking for a vehicle for lease. You’ll want to ask yourself if it’s important to you to have a new vehicle every few years, or if you’d rather have something you fully own. There’s a lot to consider and we’re here to help you along the way.
In this blog, we’ll walk you through all the advantages of leasing a vehicle and answer all your questions about leasing new or used, leasing a vehicle with bad credit and why it could be worth it. Let’s get started!
Is leasing a car really worth it? 5 advantages of leasing a vehicle
Most people will probably tell you buying a car outright is the better financial decision. You’re working towards something you’ll own entirely versus paying to drive a vehicle for a temporary period of time. On the flip side, leasing can sometimes be a more affordable option with less commitment.
Everyone’s needs and budget are different and there are pros and cons to both buying and leasing. Let’s look at some of the advantages of leasing a car in Manitoba.
- Lower monthly payments. When you lease a vehicle, you’re only paying for the vehicle’s depreciation (or decrease in value) over your lease term, plus interest. Your payments will likely be 30 to 60 per cent lower than standard car payments which could give you the opportunity to drive a higher quality vehicle for less. The downside is you won’t own it at the end of the term. Some lenders will resell leased vehicles as used vehicle’s once lease terms are up, which is another reason why they may offer lower monthly payments to get them off the lot.
- You can drive a better car for less money. The beauty of leasing is you get to drive a vehicle for a shorter period of time, then switch it up. If you’re someone who enjoys trying different vehicles, this is an excellent option. With a lease, you can upgrade your car to a better model every two to three years without having to worry about trading-in or selling your vehicle.
- Lower repair costs. Typically your lease will cover the manufacturer’s general warranty, meaning you shouldn’t be stuck with any major repair costs. Things like oil changes won’t be covered, but necessary repairs and maintenance will be.
- Tax benefits. If you select a car for lease and use it for business, you should be able to write off the lease payments as a tax deduction. If you need cars for a larger staff, leasing could help you get the most bang for your buck and save your business the most money over time.
- Gap coverage. Usually all leases come with GAP insurance. This insurance protects you in case the car is stolen or is extremely damaged and the repairs would cost more than the vehicle’s depreciated value.
Leasing a new vehicle
Leasing a new vehicle gives you the opportunity to drive a brand new vehicle without the costs it would take to own it. Dealers are more likely to lease new vehicles rather than used.
So what’s in it for you? For starters, you could be looking at a much lower interest rate. Dealers may offer lower interest rates to entice customers. While interest rates will vary depending on brand, model and year, dealers try to keep the rates low so when the car is returned, they can resell it.
Most lease terms last five years max, so if you’re planning on changing cars frequently, this is the best financial option. You won’t have to deal with trade-in costs and your lease will always be covered by factory warranty.
Leasing a used vehicle
Many people decide to opt for a used vehicle instead of buying brand new. They’re more affordable and if you buy certified pre-owned, you can still get a car loaded with excellent features for an affordable price. The same goes for a used car for lease.
While used car leases are less popular, they aren’t uncommon. They offer the same flexibility as a new car lease at a fraction of the cost, making them an appealing option if your goal is affordability. Most used cars for lease are less than five years old and since they’ve already started depreciating, your monthly payments will be fairly low.
One thing to look out for is used leased vehicles may not have the same warranty as new leases. Make sure to ask the dealer if you’ll have to pay for extended warranty.
Leasing a vehicle with bad credit
In Canada, there’s actually no minimum credit score needed to lease a vehicle. This means you can technically lease a car with bad credit (and this is something we can help you with at Birchwood Credit).
However, a weak credit score will impact your ability to get a lease at an excellent rate and sometimes it’ll even affect your ability to get approved. Some dealers may not approve a bad credit lease but this isn’t the case everywhere. One of the ways you could get approved for a lease is if you have a cosigner. Your cosigner must have good or excellent credit and be able to take over your lease payments if you are no longer able to make them.
If you have less than perfect credit, a lease could be a great way to rebuild your credit, providing you make your payments on time. It also gives you a bit more financial security since the manufacturer warranty is included in the lease.
Leasing a car in Manitoba
Are you looking to lease a car in Manitoba? Our team at Birchwood Credit specializes in car loans and leases and we approve all credit types. We can help you find a new or used car lease that fits your budget and will help you rebuild your credit over time. You can also check out our blog for the best SUVs for lease.
Ready to get started? Contact our team today!