To Lease or to Finance? That is the Question! 
 

If you're nervous about tying up capital in a vehicle or worried about high monthly payments, consider leasing. The following information, including a self-evaluation chart, assesses your needs to help you make an informed choice.

When you lease, you don't pay for the residual value of the vehicle and as a result your monthly payments will be lower than if you financed the same vehicle. Residual is the amount owing on the vehicle after the lease ends; also called the “buy-out”. The buy-out is determined at the beginning of the lease, so instead of making monthly payments based on the total purchase price, your payments are based on the total price less the buy-out. GST is paid on the monthly payment, not on the full cost of the vehicle, another advantage of leasing.

Simply put, leasing is like renting. You're only paying for the portion of the vehicle that you use and this allows you to take advantage of a lower monthly payment.

Concerned about kilometers? The average Canadian driver will travel 24,000 kilometers in a year. A four-year lease covers this by allowing 96,000 kilometers over a four year period. Even if you think you may exceed that amount, leasing is still a viable option because you may purchase additional kilometers upfront at a reduced cost.

Finally, if you're a business owner, you may choose to do a Business Lease.  Leasing a car through your business gives you the benefit of writing-off car payments as a business expense. If you use your vehicle specifically for business, you can claim mileage deductions on your income tax. Be sure to check with your accountant about tax advantages.  Other advantages to short term leasing gives you the opportunity to switch it up for a new model at the end of your lease contract.

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