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ASK JACK

This advice column is available for all questions regarding the vehicle sales, leasing and buying options. You can email your questions to Jack or click on 'Ask a Question' below:

Ask Jack
Should I lease or should I buy?
Date Asked: Fri, 08 Oct 2010 10:54:13 +0000
Date Answered: Fri, 08 Oct 2010 10:55:37 +0000
One must look at the budget, the use of the vehicle and the length of time you expect to keep the vehicle. Is having a new vehicle every two or three years with no major repair risks more important than long-term cost? Or are long term cost savings more important than lower monthly payments? Is having some ownership in your vehicle more important than low up-front costs and no down payment? Is it important to you to pay off your vehicle and be debt-free for a while, even if it means higher monthly payments for the first few years?

So we find out that making a lease-or-buy decision is not quite cut and dry. There are some things you need to consider. Let's take a look at some of these things now.

Buying and leasing are different

When you buy, you pay for the entire cost of a vehicle, regardless of how many miles you drive it. You typically make a down payment, pay sales taxes in cash or roll them into your loan, and pay an interest rate determined by your loan company or bank, based on your credit history. You make your first payment a month after you sign your contract. Later, you may decide to sell or trade the vehicle for its depreciated resale value.

When you lease, you pay only a portion of a vehicle's cost, which is the part that you "use up" during the time you're driving it. Leasing is not the same as renting. You have the option of not making a down payment, you pay sales tax only on your monthly payments (in most provinces), and you pay a financial rate, called money factor, that is similar to the interest on a loan. You may also be required to pay fees and possibly a security deposit that you don't pay when you buy. You make your first payment at the time you sign your contract for the month ahead. At lease-end, you may either return the vehicle, or purchase it for its depreciated.












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