Is it better to lease or to purchase a car?
August 03 2022,
If you are shopping for a vehicle, you have probably wondered if it is preferable to lease or purchase a car. In fact, both options are good, but depending on a few different factors, one or the other might be more advantageous for you.
Cadillac Laval tells you more about the pros and cons of both of these financing options. This way, you can see what is best for you between leasing and purchasing your next electric or fuel car!
How does purchasing a car work?
There are different ways of purchasing a car:
- Paying for the full amount (cash);
- Opting for financing, with or without a down payment.
Obviously, by getting a loan with your financial institution or your car dealership, there will be interest to pay; but you can choose the length of your contract (48, 60 or 72 months).
By paying cash, there will obviously be no interest to pay; but that option is not accessible for many buyers.
Pros and cons of a purchase
There are many pros to purchasing a new vehicle; however, there are also some cons to consider.
| Pros | Cons |
|---|---|
| The vehicle is yours | The vehicle will lose value (depreciation) |
| No mileage limit | Unforeseen expenses due to repairs and maintenance |
| You can choose to sell your vehicle at any time | Interest to pay if you opt for financing |
How does car leasing work?
Leasing a car means you will be signing a leasing contract and going through a credit check, same as when you purchase a car. Here too, you will also have a choice as to a long-term or short-term leasing, in accordance with your leasing agreement.
Even if leasing is the perfect option for several people, not everyone wants to lease, or can.
Pros and cons of a car lease
| Pros | Cons |
|---|---|
| Smaller payments (you are only paying for the portion of the vehicle you are actually using) | You do not own your vehicle, unless you choose to purchase it at the end of your lease. |
| The opportunity of driving a new vehicle more often | There is a limit on mileage, and extra fees if you go over the limit |
| No worries as to unforeseen expenses | There will be penalties to pay in case of excessive damage to the vehicle, at the end of the leasing agreement |
As you can see, leasing or purchasing a car both come with pros and cons, and will depend on your needs and lifestyle. For example, a driver who might require a higher yearly mileage of 45,000 kilometers annually will definitely consider leasing as being disadvantageous, since purchasing his/her own car also means that there are no limits as to yearly mileage.
Similarly, a buyer who doesn’t travel much and has a low yearly mileage average will find leasing to be a great option, as monthly payments will be much lower. However, at the end of the leasing agreement, he will not own the vehicle unless he decides to repurchase it.
Should you purchase or lease your electric car?
This, again, depends entirely on your needs! If the current model you are looking to purchase offers sufficient electric range and charging times for all of your needs and if you don’t feel like these are likely to change over the next 4 to 5 years, then purchasing is a good option for you.
However, if you have to stop to recharge often during your daily commute and if autonomy is limited for you and charging times seem a little bit long –but you still want to drive an electric car anyway- then perhaps leasing is a better option for the time being.
Why? Because technology evolves incredibly rapidly especially when it comes to newer electric vehicles, and power and autonomy keep increasing too, while charging times are becoming shorter and shorter.
Let’s talk financing
Are you ready to get your vehicle financed? You can get a car lease directly with you financial institution, by making an appointment with your financial advisor.
However, the most common method is to get your vehicle financed directly with the dealership where you are buying your car. A financing specialist will then take care of everything for you, by contacting one or several financial institutions, so that you can get the most advantageous financing solution and interest rate.
FAQ
How to end your leasing agreement?
It is possible to end a leasing agreement. You can, for example, assign your lease to a third party, repurchase your vehicle, or even swap your leased vehicle for another. Ask a specialist to find out all of the details.
Why pay for the full amount (cash) when purchasing your vehicle?
If you can afford paying the full amount when purchasing your new vehicle, then do it! This way, you will save money on interest, which can represent a significant sum in the long run.
Why lease a vehicle?
If your budget is limited but you still want a new car, then leasing can be a great option. Moreover, you will have the opportunity to change cars more often!
Can you lease a used car?
Some dealerships do offer this option, which allows you to save a bit more money on monthly payments. Ask your dealership for more details.
Can you sublease a leased car?
It is possible to assign your leasing agreement to another person, as long as your dealership agrees. This way you can save thousands of dollars you would have to pay if you canceled your leasing agreement before the end date. However, this option is not possible in the case of a long-term lease.
How much does it cost for a long-term lease?
Everything depends on the vehicles’ original cost! In fact, an entry-level sedan will cost much less to lease then a high-end SUV like and Escalade. A long-term lease will also allow you to repurchase your vehicle at the end of your leasing agreement at a lower cost than if you had opted for a 36 or 48 month lease, for example.
How to calculate costs for a leased car?
To find out how much a leased car will cost you, you have to take into account the following aspects:
- Basic monthly fees
- The accessories you want to add
- The extended warranty (if relevant)
- The duration of your lease (which affects monthly payments)
- Etc.
To find out more about leasing or purchasing vehicles offered by Cadillac Canada, or to learn about our current promotions, come and visit us at Cadillac Laval today, close to Montreal, the West Island and Blainville!
