Lease or Finance? The New Car Question

Lease or Finance?

To Lease or Finance?

You’re shopping for a new vehicle. You find the perfect model and trim in the right colour. Now, you need to decide whether to lease or finance (assuming you don’t have the luxury of dropping a briefcase full of cash on the showroom floor). There are pros and cons to both methods of payment. Here is a quick comparison of leasing vs financing.

Lease

Leasing is the best option for people who like the experience of driving a new vehicle. When you lease you get to experience the latest vehicles more often. Enjoy the latest features and technology, as well as the sensation of driving a vehicle in perfect condition.

Also, with most lease options lasting only one or two years, you can continuously drive the latest iteration of your favourite model. Or, you can drive a new GMC Sierra one year, and a new Buick LaCrosse the next. The point is, you aren’t locked into a lengthy financing plan for a car or truck you might fall out of love with after a couple years. As a bonus, when your lease expires, you don’t have to go through the tiresome process of selling – the dealer just retakes possession.

Lower monthly payments

When you choose to lease your new vehicle, in almost all cases, you choose lower payments. Considering you aren’t paying to own, you can secure great monthly payments.

Also you won’t actually lose anything. If you fall in love with your leased vehicle, you can choose to buy it outright at the end of the lease term.

Maintenance Costs

When you lease you usually get the benefit of a comprehensive warranty. If you encounter mechanical problems, your dealer will usually take care of everything for you. After all, they’ll be retaking possession of the vehicle when your lease expires, so it’s in their best interest to keep the vehicle in perfect condition.

The same thing goes for maintenance. Your lease payments will usually cover things like oil changes and fluid flushes/fill-ups. Again, the dealership wants your vehicle to remain in perfect condition. They have to sell it again once you return it, so they don’t want an engine that’s been running with low oil.

Finance

The primary downside to leasing becomes clear when you replace the word “lease” with its synonym, “rent”. Renting a house is fine, but paying into a mortgage is an investment in property that retains equity. Instead of paying a landlord, you’re paying yourself. Of course, cars are not a comparable investment, given their rate of depreciation, but the principle is the same. At the end of your lease, you have nothing to show for it. At the end of your financing term, you have a vehicle with persistent value and no more monthly payments.

On the topic of depreciation…

When you lease a vehicle, you are essentially covering the cost of its depreciation over the course of the term. The problem with that is that depreciation rates aren’t linear. In other words, a new vehicle doesn’t lose the same amount of value each year. The majority of depreciation takes place in the first three years of ownership. When you drive a new vehicle off the lot, it depreciates 10%. After the first three years it will have depreciated by nearly 50% total. Obviously, the depreciation rate slows down afterward; otherwise, vehicles would be worthless after seven years. So, as a lessee, you’re pay for the most expensive period of ownership.

Drive It Like You Stole Own It

Driving someone else’s vehicle will always feel a bit like walking around in a china shop with your hands behind your back. Driving your own vehicle give you a little extra peace of mind. If you scratch it, bump it, or drive it hard, you’re accountable only to yourself. You don’t have to worry about mileage restrictions. So, if you suddenly find yourself travelling for work, you don’t have to worry about exceeding your limit. And if you spill some coffee on the floor mat, your life won’t end.

There are advantages and disadvantages to both leasing and financing. But Capital GMC Buick’s dedicated finance team will help you find the solution that fits your life.

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