How does leasing a car work?
By Kijiji Autos
Leasing is becoming more and more common. On the surface, it's easy to see the reason: It allows drivers to get into a brand new car for a lower up-front cost than purchasing it. Depending on your needs and preferences, it could be the right choice for you. However, it's important to know all of the details, and that's why we're here.
What is a car lease? Should I lease or buy a car?
A car lease is a contract that provides you with the use of a car for a set period of time, usually two to four years. However, this isn’t the same as car ownership. You are essentially entering into a long-term rental; and at the end of the contract, you must return the car or purchase it.
Leases typically require a down payment and then monthly payments, the latter of which includes interest, taxes and the expected depreciation costs of the car.
Whether you should lease or buy is up to you, based on your budget and needs. Read on for more info on leasing to help you decide.
What sort of leasing options are there in Canada?
Leases in Canada fall into three categories:
The standard lease is as described above. So long as you pass a credit check, you agree to a term of two to four years, offer a small down payment, and then continue monthly payments for the remainder of the contract. Once it’s over, you return the car to the dealer.
A lease takeover is exactly what it sounds like: You adopt another driver’s lease agreement. This can be much cheaper than a regular lease—especially if there’s an extra cash incentive. But we highly recommend checking out the car to make sure it’s in good condition and not close to the annual mileage limit.
Leasing to own changes the agreement so that the driver is paying towards eventual ownership. The approval process tends to be easier than a regular lease, but the cars may be older.
The perks of leasing a car
As we said, the main draw of a lease is that you’ll find yourself in a brand new car for a lower initial price than buying it. Because you’re probably not taking out a loan for the car, your monthly payments will be less, too.
Those that feel the need to change cars every few years will appreciate the leasing approach. This way, you’re able to swap out one car for another every few years, whether it’s a different trim of your existing car or a whole different model.
The other main bonus is a relatively stress-free few years of driving. A new car will come with a warranty, and you’ll likely be returning it before the warranty ends. Some leases include the regular servicing as part of the monthly payments too, so there’s little in the way of additional costs over the course of the contract.
The drawbacks of leasing a car
Easily the biggest drawback of leasing is that, unless you choose the lease-to-own route, you don’t have any equity at the end of the term. Over a 10-year period, leasing multiple cars will likely cost you more than owning one car, even factoring in the wear and tear on the owned one.
Another important aspect to consider is mileage. Most contracts have a strict annual limit—usually around 25,000 km—and going over this can cost you dearly.
Similarly, if you want to walk away from a car lease, it will cost you the remaining balance on the contract. Same with if you decide to buy out the rest of a contract.
Learn even more about leasing, credit and finance with this informative article.
Going to stick to buying your next car? Find it in Kijiji Autos’ thousands of available cars.
Easily find your next ride on Kijiji Autos
Search now10 popular SUVs and crossovers in Canada
There's no doubt that Canadians navigate a wide variety of weather and lifestyle conditions every day. This makes a fun, practical and comfortable SUV or crossover a solid vehicle choice, from coast to coast. Listed in no particular order, check out these 10 popular SUV and crossover models to...The best features of 10 popular hatchbacks
If you are in the market for a hatchback, you'll want to check out this overview of these 10 models and the features that make them so popular. Kijiji Autos will help you confidently choose between the best hatchbacks, including used, sporty and hybrid models – whatever is a priority for you.10 popular vans in Canada
Cargo vans and minivans can meet the needs of many drivers. There are plenty of models to choose from at various price points, which can make it difficult to pick the van that's right for you. Whether it's passenger capacity or cargo space you're after, Kijiji Autos is here to help with your search.Top 10 popular pickup trucks in Canada
The pickup truck has always been a symbol of utility and strength, and lately, many models have become luxury family vehicles that leave nothing to be desired. In no particular order, these popular brands represent a range of available features, engine types and towing capacities. Check out the...10 popular sedans in Canada
Sedans are versatile vehicles that meet a variety of driving needs. Are you looking for a sedan in your area? With so many different styles, sizes and price points to choose from, it can be difficult to pick a model from such a long list of award-winning vehicles. In no particular order, these...What You Should Know About These 10 Popular Wagons
If you are looking to buy a wagon, explore Kijiji Autos list of these popular models, and the features that make them a great choice for your next car. This list is in no particular order and will help you easily choose between great wagons, whether you’re looking for luxury, affordable, small...9 popular coupes in Canada
Sporty and sleek, the coupe is a popular two- or four-door car that puts the fun back into driving. Fuel-efficient and compact, this body style is designed for performance. Are you looking for a coupe for sale near you? In no particular order, here is a list of 9 popular coupes in Canada...7 popular convertible cars in Canada
Convertibles are fun and adventurous cars that are perfect for cruising around when the weather is great. Are you looking to buy a convertible? From roadsters to off-roaders, convertibles (or cabriolets) are a great choice for those who love driving for its own sake. Can't decide which...Things first-time car owners should know
A car can seem like a complicated machine, and most maintenance jobs are best left to a mechanic, but if you’re a first-time car owner about to buy that perfect first car on Kijiji Autos, here are some things you should know. Editor’s note: This article has been newly updated. However, there...What will future car shows look like after COVID-19?
As the global coronavirus pandemic continues to affect everyday life, many public events, including concerts, sporting competitions and car shows have been cancelled or postponed for the foreseeable future. For some industries, COVID-19 simply represents a storm to be weathered, while for others,...