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LEASING VS FINANCING OWNERSHIP

To give you a quick guide for LEASING VS FINANCING OWNERSHIP
Leasing – You do not own the vehicle. You can use it but it has to be returned at the end of the lease unless you have chosen to buy it out at the end.
Financing – You own the vehicle and keep it at the end of the financing term. That’s yours to keep for good

UP FRONT COST
Leasing – it may include the 1st monthly payment, security deposit, registration and other fees and charges.
Financing – down payment, taxes, security deposit, other fees and charges.

MONTHLY PAYMENT
Leasing – lower than financing, you are paying partly for the vehicle depreciation and a little bit of monthly payment
during the lease term, plus rent charges like interest, taxes and fees.
Financing – higher monthly payment than leasing. You are paying for the entire purchase price of the vehicle, interest and other finance charges and fees.

EARLY TERMINATION
Leasing – you have to pay any early termination charges if you will terminate the lease earlier than it should be.
Financing – you have to payoff the amount if you end the loan early.

VEHICLE RETURN
Leasing – you may return it at lease end, pay any end lease costs, and walk away.
Financing – you may have to sell/trade in the vehicle.

KILOMETER RESTRICTIONS
Leasing – there are certain number of kilometer limitations (often from 20,000 – 24,000 kilometers per year)
Financing – you may drive as many kilometers as you want but… be aware of.. the higher your mileage is… the lower the resale value of your vehicle.

EXCESSIVE WEAR LIMITATIONS
Leasing – you have to pay charges for exceeding those limits when you return it
Financing – no limitations but again excessive wear may lower the resale value of your vehicle.

FUTURE VALUE
Leasing – you have nothing to worry about, the lessor or the leasing company take the risk of the future value.
Financing – you have the risk of the vehicles market value when you trade or sell it.

END OF TERM
Leasing – you have the option to buy the car (CASH or FINANCING), walk away or return the car to the dealer or RE – lease it again for the second time.
Financing – at the end of the term, you have no further obligations.

Now, deciding whether to lease or buy a car depends on so many things but most of all … it’s you.

I welcome letters or inquiry regarding your experiences in purchasing a car or questions before buying the right vehicle for you. This column may not be the perfect solution but I know these can help you decide the right car, somehow…