Finance or lease a car in Montreal: which is better?

After buying a home or paying rent, a vehicle is typically the biggest investment a person will make. And there are lots of options, from outright cash purchase to finance and leasing. Once you’ve taken a look at our inventory and decided on a specific vehicle, here are some thoughts to help you figure out which scenario is best for you.

Buying a vehicle cash
Unless you have a lot of disposable cash, purchasing a vehicle—especially a new car—for its selling price is generally not recommended. You’re spending available money to purchase something that loses value over time, meaning this money is no longer available to invest in other opportunities that could increase in worth – like real estate in Montreal. 

This is especially true in the first 2–3 years, when a new vehicle loses the bulk of its value.

Financing a vehicle in Montreal
With financing, the total cost of the vehicle is spread over a certain number of years and broken down into monthly or biweekly payments, with a longer term allowing for lower payments. 

The main appeal of financing a vehicle is that it’s “yours”. If there’s a sudden change in your financial situation, you have the possibility of reselling the vehicle to pay off your loan and maybe downgrade to something more modest. You’re also not limited by mileage restrictions, and you can modify the vehicle however you want — installing racing accessories, for example.

Leasing a car in Montreal
With leasing, you only pay for the value the vehicle is losing during the lease term, or depreciation. This value is spread over a smaller number of months—typically 24 to 48—and converted into regular payments. 

Because the actual amount being loaned is smaller, lease payments are lower than finance payments on the same vehicle. This gives you the choice of either enjoying extra disposable income every month, or upgrading to a fully equipped version of the same vehicle for similar payments. 

Most leased vehicles are still covered by the manufacturer’s warranty, minimizing the risks of unexpected repairs. 

A leasing contract almost always includes a mileage allowance for the duration of the term, used in calculating the depreciation and amount of the loan. The penalties for going over the limit can make for a nasty surprise, so it’s wiser to pick the right mileage allowance in the first place.

So which is best? Lease or finance?
Every person’s situation is different, but a good rule of thumb is:

If you drive a lot and plan on keeping the same vehicle for a long time, consider financing.
If you want smaller monthly payments or a more luxurious car, change your vehicle every few years and spend less time at the garage, consider leasing.

For more information, don’t hesitate to get in touch with our team or to fill out our Finance Application Form. You can also book at appointment to visit the Holand Leasing showroom at 8525 boul. Decarie, Montreal, QC.

Sources: AutoTrader and MoneySaver


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