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Lease or Buy?

Financing vs Leasing

(For Comparison Purpose ONLY. Interest rates and buyback are always variable.)
2012 Honda Civic LX Automatic 4 Door FINANCE LEASE
Cash Price or Capital Cost $20,003.00 $20,003.00
Options Added $0.00 $0.00
Trade Value Deduct $0.00 $0.00
Manufacturer Rebate After Tax $0.00 $0.00
Taxable Amount $20,003.00 $0.00
HST Tax (13%) $2,600.39 $0.00
Capital Cost Total $0.00 $20,003.00
Downpayment $0.00 $0.00
After Tax Rebate $0.00 $0.00
Balance Outstanding $22,603.39 $20,003.00
Interest (% Per Year) 1.99 1.99
Loan Period in Months 60 -
Lease Period in Months - 48
BuyBack - $9,470.00
Monthly Payment $396.09 $243.77
HST Tax (13%) $0.00 $31.69
Monthly Payment - No Payment 30 Days $396.09 -
Monthly Payment - Including HST - $275.46
Downpayment $0.00 $0.00
First Month Payment Excluding HST $0.00 $243.77
HST Tax (13%) $0.00 $31.69
Total Upfront Cost (Licence Extra) $0.00 $275.46
Principal $22,603.39 $20,003.00
Cost of Borrowing $1,162.01 $1,167.96
Total Cost With Interest - $21,170.96
HST Tax (13%) $0.00 $2,752.22
Total Cost With Interest $23,765.40 -
Total Cost Including Buyback & Interest - $23,923.18
At Find A Car Canada we are asked these questions daily. First, you must ask yourself whether you plan to keep the car for a long time, that is 4 years or longer. In the long run, it is less expensive to finance or pay outright for most vehicles if the interest rates for financing or leasing are similar. However if you like lower payments and want to change cars every 3 or four years without worrying about the depreciation, resale and repairs after the warranty is finished, then leasing is for you.

If you do decide to lease your next car or truck, we can also help. We have access to manufacturer's rebates not advertised to consumers, special interest rates and the real cost of the vehicle you want.

Lease Benefits

Shorter Terms - This means getting a new car more often. Since most manufacturers offer at least a 3 years or 60,000 kilometer bumper to bumper warranty, you are protected for all or most of the time you lease the car.

Tax Deferral - You are not financing taxes and interest on these taxes. An average new car in Canada costs roughly $25,000.00. If you financed it, you're subject to $3250 in HST taxes in Ontario (percentage differs in other Canadian Provinces). You’ll also be paying interest on this amount for the term you choose. If you leased the same car for the same term (i.e. 36 or 48 months) you will have lower payments - and more disposable income every month. At the end of the term, you have the first shot at buying the vehicle at a predetermined amount.

At Find A Car Canada we strongly suggest a "closed" end lease. Just think of it as" close the door and walk away". In this scenario, you are not guaranteeing the end value or buyback and have no obligation to buy it upon expiration at lease end. You do not have to worry if the vehicle has depreciated more than its' expected buyback. Leases are normally based on 24,000 Kilometers per year. Some will offer Low Kilometers leases and most will allow you to factor in more than 24,000 KM if needed.

In an "open" end lease you guarantee the value of the vehicle. Let's assume that your lease payments are based on a $20,000 new car being worth 10,000 at the end of your lease agreement. If the car is appraised at only $8000, you must pay the lessor (the company who leased the car to you) $2,000 plus any Administration fees if you don’t buy the car.

Should I buy new or used?

If you are considering a new vehicle you will get full warranty for 3 years or 60,000 km, 4 years or 80,000 km for luxury vehicles and 5 years or 100,000 km warranty from a Korean Manufacturer like Hyundai. Your monthly expenses for the vehicle remain fixed for the warranty period except for your maintenance costs – i.e. oil, filter and tire rotations.

If you are looking at Used, most Manufacturers include a power train warranty (engine, transmission and major components) that covers the vehicles a minimum of 5 years and 100,000 kilometers or 6 years or 120,000 km for luxury vehicles. That Warranty started the day that the vehicle was put on the road. You're paying less for the previously enjoyed vehicle but your potential costs to repair and maintain the vehicle (fixed costs) would increase as the vehicle gets older.