Our Advice - It is Better to Lease Expensive Vehicles
Simply put, leasing is an alternative form of financing your
vehicle purchase. It isn’t necessarily better or cheaper than
financing, but it does offer some pretty significant advantages
for most people. We’d like to offer you our opinion:
We think leasing makes sense for most people, given the vehicles
we sell. As a general rule of thumb, it probably makes more sense
to lease vehicles of this calibre than less expensive vehicles
(under $25,000 for instance). Here’s why:
1. You don’t pay the sales tax upfront. In BC, this
is often as much as 15% of the purchase price. Instead, your
monthly payment and any down payment is subject to sales tax.
Further, if you never exercise the purchase option at lease end,
you’ll never pay the sales tax on that portion either — often 40%
of the original value of the car. That’s a massive advantage.
2. You don’t incur finance costs (interest) on the
sales tax portion of your purchase. This is a significant
advantage for two reasons: you save interest costs on up to 15% of
your purchase price, and; your loan value starts 15% lower.
Meaning — should you want to change your car sooner than the end
of term, you have a 15% advantage with leasing versus financing.
Think about it — that’s a giant difference.
3. Sales taxes aside, we think leasing makes more
sense than buying. You’ve heard it before: buy what appreciates,
and lease what depreciates. In practical terms, here’s an example
that we find people can relate to more easily: you wouldn’t buy a
house for $2,000,000 to live in if you knew it would be worth
$1,250,000 in 3 years; you would choose to rent. So why buy a car
for $200,000 that’s generally going to be worth $125,000 in 3
years? It just doesn’t make any sense.
4. There are many other reasons we like leasing
better than financing. Generally speaking, our lease underwriters
don’t report your lease to the credit bureau, meaning it won’t
affect your debt service ratio, allowing you to borrow more when
you need it for other things in your life, like buying a house or
investing.
Some of our customers have access to a line of credit at a lower
interest rate than our lease providers offer. The low rate however
is often offset by how the interest is calculated (often
compounded daily), and how repayment terms are made. Often, a low
rate line of credit can actually cost significantly more in total
interest paid than a lease at a higher rate.
Get more car for your money! Lower payments! We have no doubt
you’ve heard that before. But what does it actually mean? If you
were to buy a car and finance it on the same term as a lease, your
payment will ALWAYS be lower on the lease. If you were to stretch
the finance term in order to match the lease payment, you will
ALWAYS pay more interest (assuming the same rate) than the lease.
That’s just the simple truth in math; leases offer better cash
flow than financing, plain and simple.
Get a new car more often! We’re sure you’ve seen that argument for
leasing before, too. While it is true that lease terms are
inherently shorter than car loans, the choice is ultimately yours:
buy the car at lease end, return it to us, or lease something new.
You don’t have that flexibility with a car loan — you’re subject
to market fluctuations, going to the dealer to get your trade in
value, or selling the car yourself. The lease essentially
guarantees your trade-in value. Not bad, in our opinion. We think
you’ll agree.
Financing Program
We’ve given you our opinion on leasing, but you’re still not
convinced it’s the right option for you. Fair enough.
We also offer financing programs so you can take advantage of the
best rate available on your vehicle purchase through one of
Canada’s leading banks or Credit Unions.
No having to call your banker, set up an appointment, or having to
navigate a cumbersome online process or any other hassles usually
associated with securing a car loan – we do it all.
We offer loans from our preferred partners: RBC Royal Bank, TD
Bank, Scotiabank, and National Bank, amongst others. Much like a
mortgage broker, we shop for the best combination of rate and term
on your behalf, secure an approval, and complete all the paperwork
right here in the dealership, saving you both time and money.
With fixed or variable options, competitive rates and terms from
12-96 months, we can arrange financing on almost every vehicle we
have in stock, regardless of whether you want to lease or finance,
on terms that work for you and your life.