Should you buy or lease a car? It’s an important question to ask. There are several things to keep in mind when deciding whether buying or leasing is better.
IN THIS POST, WE COVER:
- How does buying vs. leasing a car work?
- Pros and cons of buying a vehicle
- Pros and cons of leasing a vehicle
If you’re looking for your next vehicle, you might be debating whether to buy or lease. Weighing both sides can help you determine which one makes the most sense for your budget and needs.
How does buying vs. leasing a car work?
Buying a car means taking ownership of it. If you’re financing a new or used vehicle, you’ll make payments against the loan. In the meantime, the dealer or lender holds onto the title.
Once you’ve paid the loan in full, the title is signed over to you. Now you own the vehicle free and clear until you decide to sell it or trade it in on another car.
With leasing, you never own the vehicle. You pay a monthly lease payment to the dealership in exchange for the right to drive the car, according to the terms of the lease.
Once your lease expires, you can give the car back and exchange it for another one, renew the lease or purchase the vehicle outright if the lender offers that option.
Pros and cons of buying a vehicle
Here are the biggest advantages of buying a vehicle instead of leasing:
- You can use it as a trade-in on your next vehicle.
- There are no restrictions on how often or how far you can drive.
- You can customize your vehicle any way you like.
- Financing is available to help you complete the purchase.
When you own your car, it’s yours to do with as you see fit. Leasing a vehicle often means adhering to certain conditions for the time that you drive the car.
On the other hand, there are some downsides to owning a car:
- Depreciation can reduce the vehicle’s value, giving you less trade-in value.
- You’ll need cash for a down payment if you’re financing a car purchase.
- If the car doesn’t come with a warranty, you’re 100% responsible for repairs.
Pros and cons of leasing a vehicle
Leasing has its own ups and downs. The benefits of leasing include:
- Being able to drive a new to you vehicle every few years.
- Monthly lease payments may be lower compared to car loan payments.
- Repairs and maintenance may be covered by the manufacturer’s warranty.
- You may have the option to buy the car once the lease is up.
These are the chief drawbacks associated with leasing:
- You’re paying money for something you don’t own.
- Your lease agreement may restrict the number of miles you can drive each year or over the lease term.
- You may have to pay a fee for excessive wear and tear when you return a leased vehicle.
- Terminating a lease early could also result in a penalty fee.
Between the two, leasing usually only makes sense if you don’t do a lot of driving and you like the idea of being able to upgrade to a new car every two to three years. On the other hand, buying is the better option if you want to make an investment in something for the long-term and you log more miles than the average Canadian driver.
If you’re learning toward buying a car instead of leasing, you’ll want to work with a financing company that’s equipped to meet your needs. Birchwood Credit Solutions offers new and used vehicle financing for buyers from a variety of credit backgrounds, including those with credit affected by bankruptcy or divorce, as well as new residents to Canada.
Visit Birchwood Credit Solutions today to review our extensive inventory of new and used vehicles. If you’re ready to make your next car purchase, complete our quick and easy online application to get started.