Lease Vs Finance: What’s Best In Alberta?

Deciding whether to lease or finance a car in Alberta can be as tricky as choosing the right toppings for your poutine.

Leasing a car vs financing a car have their perks and pitfalls, and what works for one person might not be the best for another. At House of Cars, we talk about the two options so you can choose the best option for you.

Leasing Pros & Cons

Leasing a car is like renting an apartment. You pay a monthly fee to use the car, but you don’t actually own it. At the end of the lease term, you have to return the vehicle or opt to buy it at a predetermined price.

Here’s why leasing might be a good fit:

Lower Monthly Payments

Leasing generally comes with lower monthly payments compared to financing. This can be appealing if you’re working with a tight budget but still want to drive a new car. For example, a compact car like the Toyota Corolla might cost significantly less per month to lease than to finance, making it an attractive option if cash flow is a concern.

Driving the Latest Models

Leasing allows you to drive a new car every few years. This means you can always have the latest technology and safety features without the hassle of trading in or selling your old car. For those who love staying current with automotive advancements, leasing offers the flexibility to upgrade more frequently without the hassle of having to sell first, then buy.

Maintenance and Warranty

Since most leases last between 2 to 4 years, the car is usually under the manufacturer’s warranty. This means fewer out-of-pocket expenses for maintenance and repairs, giving you peace of mind while you’re on the road.

The Downsides of Leasing

Mileage Limits

Leases often come with mileage limits, usually around 20,000 to 24,000 kilometres per year. If you exceed this limit, you could face hefty charges. For Albertans who love taking long road trips to the Rockies or frequent drives between cities like Calgary and Edmonton, this can be a significant drawback. However, an option, if within your financial means, could be leasing a car and financing a second car to have for those long trips. 

No Ownership Equity

At the end of the lease, you don’t own the car. You either return it or buy it out, often at a higher cost than if you’d financed it from the start. So, if you like the idea of owning your vehicle outright, leasing might not be for you.

NO Modifications

Most lease agreements prohibit modifications, including changes to the car’s interior, exterior, or mechanical parts. The vehicle must be returned in its original condition, excluding normal wear and tear. If you make changes, you might be charged to restore the car to its original state. Additionally, modifications can void the warranty, leading to extra repair costs.

It’s best to contact your leasing company first. They may allow certain reversible modifications, like adding a new stereo system, as long as these changes can be undone without damaging the vehicle. Always get written permission to avoid any disputes later on.

Here’s why financing might better:

When you finance a car, you’re essentially taking out a loan to buy it. Over time, you make payments that cover both the principal loan amount and the interest. Once the loan is paid off, the car is yours to keep.

Ownership

One of the biggest perks of financing is ownership. Once you’ve paid off the loan, the car is yours. This means you can drive it for as long as you want, sell it, or trade it in without any restrictions.

No Mileage Limits

Unlike leasing, financing doesn’t come with mileage limits. This is particularly beneficial if you drive a lot or plan on taking long trips. It’s your car, so you can drive it as much as you want without worrying about penalties.

Customisation

Financing gives you the freedom to customise your car however you like. Whether you want to add a new sound system, get custom rims, or slap on some decals or a roof rack, the choice is yours.

The Downsides of Financing

Higher Monthly Payments

Financing typically comes with higher monthly payments compared to leasing. This is because you’re paying off the entire cost of the car, plus interest. If you’re on a tight budget, this could be a significant drawback.

Depreciation

Cars depreciate, meaning they lose value over time. This is especially noticeable in the first few years. So, if you plan to sell the car shortly after paying it off, you might not recoup your investment.

What’s the Best Choice?

The choice between leasing and financing ultimately depends on your financial situation, driving habits, and personal preferences. If you like driving the latest models and want lower monthly payments, leasing might be the way to go. But if you prefer owning your vehicle and having no restrictions, financing is likely the better option.

Choose House of Cars for Financing

At House of Cars, we offer financing options to suit your needs. With our massive network of banks and lenders, we can secure you a loan with competitive rates for 1000+ used cars. Plus, we provide an easy online financing application that won’t impact your credit score to get a pre-approval, helping you estimate your rate quickly and easily.

Check out our inventory and let us help you find the perfect car with the best financing or leasing plan for you!