Leasing or financing your next vehicle?

When it comes to purchasing a new vehicle, many consumers are faced with the difficult decision of financing or leasing. It is not an easy decision to make, and it involves a lot of factors. Ultimately, the decision will come down to your individual needs and lifestyle, and it is important to be informed and plan ahead on how we plan to use our vehicle in the next three or four years.

“It’s a mistake to only look at the monthly payment when deciding whether to financing or lease your next vehicle. There are other factors at play, even tax implications. It’s important to gather as much information as possible before coming to a final decision”, says a sales representative at Camco Acura.

The main factors to consider are: how many kilometer you drive each year, when do you plan to buy a new vehicle, and if you can use your vehicle as a tax deduction.

Leasing contracts will always have a mileage restriction attached to them. This restriction can be 16,000, 20,000, 24,000 kilometers annually. Sometimes it can be more or less, but the basic premise is that if you drive long distances every year, you may be hit with important penalties at the end of the lease contract.

If you plan to buy your next vehicle in less than 5 years, then leasing is the way to go. By doing so, you are not going to be penalized for depreciation. However, if you plan to keep your vehicle beyond the leasing or financing contract, financing will usually be more advantageous because interest rates tend to be lower on financing and compared to the cost of financing the amount left to buy at the end of the lease.

Finally, if you are a business owner, there may be more deductions available when leasing. It is important to talk to a financial or tax advisor to get all the information.