Vehicle Leasing

Thinking About Leasing A Car?

When it comes time to get a new car, the two most common options are to lease the car or to finance it. However, you might not know what the difference is between leasing and financing. Here's a quick guide on what it means to lease a car.

What Exactly Does Leasing Mean?

In a nutshell, leasing is like renting a car from a dealership for long period of time, usually anywhere from 24 to 60 months. There are benefits of leasing as well such as a lower monthly cost and the initial down-payment might be lower as well. You will get a new car every few years and you don't need to worry about selling the car when you're done with it. You just need to hand your keys in and you get a new car.

BENEFITS OF LEASING VS FINANCING

 

Who is the vehicle's owner?

Financing

This is a straight path to vehicle ownership. All you have to do is usually pay an amount as down payment, keep up your installments, and enjoy complete ownership of your car after successful completion of the finance period.

Leasing

Here, the lending institution remains the legal owner of the vehicle throughout the term of the lease. You do not own the car, but rather pay for using it for a set amount of time. This is why lease payments are lower than finance payments.

What about up-front payments?

Financing

A down payment is sometimes necessary when financing a vehicle, and is part of the agreement between you and the lending institution. You can use the trade-in value of your old vehicle as down payment, or utilize any equity to fulfill this requirement. The actual amount to be paid up-front usually depends on multiple factors, including the make and model of the car, your credit score and the lending institution's requirements.

Leasing

Most of the time, this option frees you from paying any amount up-front. All that is usually required is payment of the first month's installment, the security deposit, the acquisition fees and other related taxes and fees. But you can always customize your lease by opting to pay a down payment, which will work towards reducing your scheduled payments.

What about the vehicle's future value?

Financing

Your vehicle's market value will depend on its depreciation over the finance term and on how well it has been maintained throughout its life. Factors that can significantly reduce a car's value include accidents and irregular maintenance. The best way to take care of your investment is to follow all recommended service timelines in your car's booklet, and to always take your vehicle to a factory-authorized repair and service facility.

Leasing

A vehicle's future value should only be considered here if you intend to purchase it during or at the end of the lease term. If that is not the case, you simply hand the car back to the financial institution upon expiry of the lease. However, you have to be mindful of all mileage limits and wear and tear guidelines throughout the lease term or you could end up paying extra upon returning the car.

What happens at the end of the term?

Financing

Once you have successfully made all your payments and met all conditions on your contract, the vehicle is all yours to keep. The financing institution will issue you a Lien Release declaring that the car is completely paid off, and will then be yours to enjoy without any scheduled payments!

Leasing

Multiple options become available to you when you approach the end of your lease term. You can either return the vehicle and close the agreement or return it and lease a brand new car for another term. You can also purchase your vehicle during or at the end of your contract, or trade it in before the lease is over. We can happily customize your lease contract to suit all your needs!

 

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