In this article, we’ll take a look at whether it’s better to lease or purchase your next vehicle.
Whatever you decide, Hansma Automotive can make sure your vehicle is well maintained - contact us today to book an appointment.
Deciding whether to lease or purchase is based on a number of factors, including your monthly cash flow, how often you drive, how long you will need the car, and how much money you have available up front.
Let’s dig in and take a closer look.
Lease or Purchase a Vehicle: What's The Better Option?
What is a car lease?
A car lease is one way of obtaining a new or used car. With a lease, you only pay for a portion of the car’s actual cost instead of paying for the car in full.
In other words, when you lease a new car, you are only paying for the segment of the car’s lifespan you are taking advantage of over the course of your lease agreement.
That segment is the amount of depreciation the vehicle will suffer over the course of your lease.
Pros: You pay only for the period of time in which you will be driving the car. The vehicle is usually a newer model.
Cons: There will be a mileage agreement, and if you go over, you will face exorbitant fees. See the expected mileage section below for more.
Many people lease new cars because you get the best years out of it while not being on the hook for the car’s total value
How is purchasing different from leasing?
Many people instead commit to purchasing a vehicle. In the event that it’s a fairly new vehicle and you choose to make regular monthly payments, you’re able to build equity.
Therefore, once you pay off the loan, the vehicle is yours and you can later sell or donate it down the road.
If you buy a car outright without a loan, then you can immediately do whatever you want with it. You’re not bound to any payment plans, nor are you obligated to keep it for any specific length of time.
This is fairly typical approach for those in the market for a used vehicle.
For your reference, here’s what you need to do before and after you buy a used car, including the registration process.
Pros: Once you pay off your vehicle loan, you are free to do with it what you will, including resell options. This is called building equity.
Cons: Your vehicle begins depreciating as soon as you drive it off the lot, meaning there’s always a measure of risk and loss when purchasing a vehicle.
Purchasing a car offers more flexibility than a lease
Lease or Purchase a Vehicle: Factors To Consider
A recent Life Hacker article outlines several factors to consider when deciding between a lease or purchase on your next vehicle. Here’s a few to consider.
Monthly Finances
Leasing a car often has a lower monthly payment compared to financing a car with the same loan terms. That’s because with a lease, you’re paying for the depreciation of the car during those years rather than the whole vehicle cost. Therefore, if you need more cash in hand month by month, leasing may be more favourable. (Source: Life Hacker)
The following hypothetical example is based on a $29,429 2017 Mazda CX-5 Touring with an automatic transmission, courtesy of Consumer Reports.
Expected Mileage
Lease agreements typically involve mileage limits so as to limit the expected depreciation. Therefore, you’ll probably have to pay extra for each additional kilometre.
Smart Money says many leasing companies charge 15 to 20 cents a mile for additional miles (USD), but you could possibly pay less if you buy them up front when you negotiate the lease. Consider, then, how often you’ll be driving before making this decision.
Length of Ownership
This is a big consideration, of course, since if you really only want to drive the car for a few years, leasing is the most convenient option. Make sure you can stick to the terms of the lease, however, as you will likely be penalized if you try to get out of it early.
“The reality: Buying a car is almost always cheaper in the long run, according to most calculations, such as this one from Cars.com. The longer you own the car, usually the more you save by buying.” (Source: Life Hacker)
In short, if you’re looking for a nice ride for a few years before you upgrade or consider a more permanent purchase, leasing is a good option.
While purchasing may carry a higher initial down payment or monthly bill, there’s more flexibility in the long run as you can potentially drive it for years if well maintained, and later sell for a return on your investment.
To lease or purchase? The decision is yours in the end - do what you think is best for you and your family!
Whether You Lease or Purchase, Trust Hansma Automotive For All Vehicle Needs
At Hansma, we offer service with a difference. We have worked hard to gain a reputation for honesty and quality work. Trust the professionals at Hansma to only recommend and carry out the repairs that your used car actually needs. Our customers have come to consider us as their mechanic friend, and as such, we promise to give you top-notch service at reasonable and competitive rates.
"I have dealt with Hansma Automotive for my vehicles mechanical and car detailing several times and recommended family and friends and we were all very pleased every time. Peter and his staff are always helpful and pleasant, I will be back!"
- Diane Knowles
Read more testimonials here
Click here to meet our friendly team or contact us today and find out about the Hansma service difference for yourself. We are open every weekday from 8 AM to 6 PM. Come see us at 88 Shoemaker St. in Kitchener, Ontario.