Leasing vs Financing: What is the Right Choice for You?

When you're ready to drive off in a new vehicle, one of the most important decisions you'll face is whether to lease or finance. Both options have their advantages, but the right choice depends on your needs, budget, and lifestyle. Let's explore the differences between leasing and financing to help you decide which option might work best for you.

What Is Leasing?
Leasing a vehicle is much like renting. You agree to drive the car for a specific term, usually 2-4 years, and make monthly payments during that time. At the end of your lease, simply return the vehicle to the dealership. Leasing is a great choice if you enjoy driving a new car every few years, without the long-term commitment of ownership. With leasing, your monthly payments are typically lower than financing, as you're only paying for the vehicle's depreciation during the lease period rather than its full value.

What Is Financing?
Financing is all about ownership. When you finance a vehicle, you take out a loan to pay for it over time, and once the loan is fully repaid, the car is yours. While financing usually means higher monthly payments than leasing, you're building equity in the car, and once you've paid it off, you can drive it for as long as you like without further payments. Financing gives you the freedom to own the car and make any modifications you wish.

Which Option Is Best for You?
If you value driving the latest models and having a lower monthly payment, leasing might be the best option for you. Leasing often appeals to those who don't drive long distances, as most leases come with mileage limits--typically between 20,000 and 25,000 kilometers per year. However, if you're someone who prefers to keep your car for many years or drives a lot, financing is likely the better option. Once your loan is paid off, you have no more payments, and you'll own your vehicle.

Your Options at the End of a Lease
When your lease term is up, you generally have three options:

1. Walk Away and Upgrade: Simply return the vehicle to the dealership and, if desired, lease or finance a new model. This option is ideal if you like the flexibility of driving a newer vehicle every few years.
2. Buy to Trade or Sell for a Profit: If the car's market value is higher than the lease buyout price, you may have the opportunity to purchase it and then sell or trade it. This way, you could potentially make a profit.
3. Buy to Keep: If you've enjoyed the vehicle and want to continue driving it, you can choose to buy it outright and continue using it as your own.

Key Benefits of Leasing

• Lower monthly payments
• Access to new models every few years
• Warranty coverage for the lease term, so most repair costs are covered
• Lower upfront costs

Key Benefits of Financing

• You own the car outright once the loan is paid off
• No mileage restrictions or end-of-term fees
• Freedom to modify the vehicle
• Long-term savings if you keep the vehicle beyond the loan term

Ultimately, choosing between leasing and financing depends on how often you like to switch vehicles, how much you drive, and what kind of monthly payments you're comfortable with. At the end of the day, both options have their advantages.

If you're looking for guidance, the team at Drayton Valley Ford is here to help you weigh your options and find the perfect solution for your next vehicle. Whether you're interested in leasing or financing, we're happy to discuss your options and help you make the right choice for your situation. Contact our Finance department here.