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Lease or Buy a Car? Pros & Cons of Each

Lease or Buy a Car? Pros & Cons of Each

The question of whether to lease or buy a new car is one that has been around for decades and it likely to still be around decades from now. Some people swear by one over the other while others choose whatever suits them best.


Our Oakville auto loans team outlines the pros and cons to lease or buy a new car to help you make an informed decision.


Pros of leasing a new car


There are definite advantages to leasing.


Lower monthly payments – Leasing a car generally means lower payments. Some leases have been increasing in price but on the whole, you should be paying less each month.


New car every 2-3 years – If you like driving the latest and greatest, you get a new car at the end of every lease. Depending on the term of the lease, that could be every 24 or 36 months.


No maintenance worries – Leases generally come with servicing and maintenance included, which means no extra hassle.


No having to sell the car – If you’re not a fan of trading in or selling your cars privately, leasing could be for you. Drive the car until the end of the lease and swap it for a new one.


Cons of leasing a new car


There are downsides to leasing too.


You never own anything – A lease is a rental agreement where you rent the car from the dealership or leasing company. You’re paying out but won’t end up owning anything.


Down payments – Many leases require a down payment similar to buying a car. Only with leases, that down payment disappears and doesn’t form part of the asset at the end.


End of lease handover and fees – The dreaded end of lease handover is not something many of us look forward to. The inspection and inevitable fees for extra wear and tear and damage are a definite downside.


Leasing is continuous – Unlike an auto loan where you eventually pay it off, there is no end to a lease unless you buy a car or arrange something else.


Pros of buying a new car


There are definite benefits to buying a new car too.


You’re paying for an asset – While you’re paying monthly payments like a lease, you end up with an asset at the end. The car will eventually be yours and still be worth cash.


Can use the car as a trade in or sell it – You can use the car as a trade in for your next one or sell it to use as a down payment. You could also just sell it for cash.


Helps your credit score – Auto loan payments help contribute your payment history, which boosts your credit score.


No end of lease handover or fees – The car is yours at the end so it doesn’t matter how many miles it has done or whether it has wear and tear or not.


Cons of buying a new car


Buying a car also has downsides.


You’re buying a depreciating asset – Some financiers have a rule about never buying depreciating assets. Cars lose value over time so will be worth less than what you paid for it.


Maintenance and servicing are yours to manage – You’ll have to manage servicing and maintenance once the free servicing period and warranty is up.


Higher monthly payments than leasing – You’ll be paying more each month to buy a car than you would if you were leasing.


Requires a down payment – While leases require down payments too, you’re looking at 10-20% of the value when buying, which can add up.


If you need help or advice on anything to do with auto loans in Oakville, contact Car Nation Canada today, we can help!


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