To buy or to lease?

Getting a car can make it easier to get yourself from here to there. You no longer have to wait for public transport, call a taxi, or ask somebody for a ride. Once you choose what type of car you want, you will need to decide how to pay for it: leasing or buying.

Young siblings running outside near a parked car

Leasing a car

When you lease a car, you do not actually own it. The car is yours to use and enjoy, but when the lease ends you must return it to the car dealership. In Canada, most people who lease a car take out a lease for 2 to 4 years. The time for which you lease a car is referred to as the lease term. Lease payments are made monthly.

The nice thing about leasing is that you get to drive a new or fairly new car. When your lease ends, your car dealership will probably invite you to lease the latest model of the same car or another vehicle of the same make. At this time, you can get another car on a 2- to 4-year lease.

Certain conditions apply when you lease a car. For example, you will be told how many kilometres you can drive throughout the lease term. If you drive more than agreed upon, you will have to pay a fee at the end of the term. Also, because the car is actually not yours, you cannot make changes to the vehicle. For example, you cannot add any custom artwork to your car. Also, if you lease one car after another, you will always get to drive a nice car, but your payments will never end.

Buying a car

In Canada, few people are able to pay in full when they buy a new car. Most people take out a loan – either through the car dealership or through their bank – and pay for the car by making monthly payments. You can usually agree on a payment term that suits your needs. Perhaps you will be able to pay back the loan over 1 or 2 years or you may need longer.

Once you have paid back your loan, you will get to enjoy having a car without having to make monthly payments. However, you must consider that over time your car will require repairs and service. You will have to pay for these repairs and service yourself.

What’s right for you?

When deciding whether to lease or buy a car, it is important to compare numbers as well as benefits. When you lease, you will pay more over the years but you will usually have lower monthly payments. Plus, you will not have to worry about the car’s reliability. When you buy a car, you may spend less over the years, as long as you take good care of the car.

For information about the CIBC Auto FinanceTM Newcomers Program, our car loan program for Newcomers through dealerships, click here.