When choosing between leasing or financing, there are many similarities as well as a great many differences. When you finance a vehicle all of the delivery charges, fees and taxes are included with the entire cost of the vehicle, and this cost is spread across the number of months you want to pay for it. Usually when a payment term is longer, the payments are smaller. A question many drivers ask is how long your payments should be stretched out, if you are planning to pay for a new car through financing.
When you lease a vehicle on the other hand, the term is usually shorter, often two or three years. The leasing company will determine the value of the vehicle at the end of your leasing term, taking into consideration the mileage, the condition, equipment, all of which is known as ‘residual value’. The difference between the complete price of sale and the residual value predicted is the basis upon which your monthly payments are calculated. Since you will typically borrow less money to lease than to finance a vehicle, the monthly payments for leasing are a lot lower.
Many Toronto drivers wonder whether financing or leasing is the right option for them. Not very many people can purchase a new vehicle with cash, and taking out a car loan to buy a new car, truck or SUV can often seem like the only option. You also have to be responsible to someone else other than yourself to pay back a loan.