- Leasing lowers the monthly payment and helps reduce depreciation
- Financing is more of an investment and doesn’t have any mileage restrictions
Have you just purchased a vehicle and now it is time to decide between leasing and financing? If that’s the case, hopefully this article will provide more information on the differences between each option and help you make an informed decision. Let’s get right into it, shall we?
“If you are someone who drives a lot of kilometers every year, say over 25,000 kilometres per year, then you are better off with financing. That’s because whenever you lease a vehicle, there are mileage restrictions which usually vary between 12,000 and 16,000 km. f you exceed that allotment, you usually have to pay a per-kilometre extra which can add up quickly”, says a sales representative at Fifth Avenue Volkswagen.
Now if you’re somebody who likes to change their vehicles every few years, say every three or four years, leasing is the best option. That’s because you do not have to worry about depreciation with a lease. Once the vehicle has reached the end of the leasing contract, you can evaluate how much it costs to buy it back compared to its current market value, and make the best decision.
If the buyback value is less than the market value, you can go ahead and buy it to either keep or sell. If it’s the other way around, you just give it back to the dealership and voilà. If you don’t like to be stuck with the same vehicle for five, six, seven, or eight years, or even more, leasing is a great option.
If the monthly payment is what matters the most to you, that usually you will find that the lease has a lower monthly payment. That’s because you are purchasing only part of the vehicle which means you’re paying less of its overall value. On the other hand, you can get some really great financing deals such as 0% APR which is much more difficult to find with a lease.
If you are someone who likes to get the most value out of every dollar spent, then more often than not financing will be the best option. That’s because you own the vehicle out right from the very beginning, which means that every dollar put into maintenance or service or your tires is really an investment. If you lease, you may not want to buy the vehicle back at the end which means that your tires that you purchased on your leased vehicle may not fit on your new vehicle, and all of the maintenance that you diligently put into it will only benefit the next owner.
There are definite pros and cons to both options. To make the right choice, you simply have to determine what matters most to you.