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Anyone that has ever had a new car has an opinion on whether it is best to own or lease a new car. A recent survey was done on the acquisition habits of Ontario and Alberta new car buyers in terms of the payment method they selected on the procurement of their last new car (which was transacted within the last 18 months). The results weren’t surprising but they might be interesting to the average individual.
According to the survey, 65 percent of people purchased their new car (60 percent opting for dealer financing offers and five percent arranging their own money – whether they had it saved up or used a personal line of credit), 35 percent of people leased their new vehicle.
“These numbers are quite accurate and very similar to other polls that I’ve seen published,” says Jim Matthews, President, LeaseBusters. “So, that begs the question, which method is better? The short answer is – neither!”
Ownership or long-term rental (lease) is a personal / business decision and both methods have their very unique pros and cons; the more appropriate question is why do 65 percent own and 35 percent lease?
After reviewing a healthy list of pros and cons, the real answer is; people who elect to own a car are happy to keep a car for more than eight years. Leasing customers only want to keep their vehicle for four years or less. And this is the answer to whether you should buy or lease your next new car.
If you are happy to keep your new car for more than eight years (and keep in mind, it takes the average Canadian close to six years – 72 months – to pay for the car in full), then you should buy/own that car and be prepared to spend needed money to maintain, repair and pamper that car. In this era, new vehicles are so well-built that this feat is not that difficult and not prohibitively expensive.
If you want to change vehicles every two, three or four years; the only affordable option is for you to lease the vehicle. A four-year lease payment is often the same a 72-month loan payment so the monthly costs are similar to the ownership method; the only difference is after the lease term expires, you simply give the vehicle back to the lessor (the leasing company which is typically the financial arm of the automaker) and lease another new car. Just be prepared, vehicle leasing requires a commitment to a perpetual monthly payment – although experts have quipped that a 72, 84 or 96-month loan payment can be construed as a perpetual payment.
So, there you have it; now you know whether you should buy or lease your next new car. The only thing you have to decide is how long you want to keep your next new car. Changing technology is often the wildcard in these decisions, so be prepared – you may not make the right decision. But that’s ok, there are several means in the marketplace to help if you need to make changes midstream through your plan.