Automotive

In the market for a new car - is it better to lease or finance?

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[OP]
Sr. Member
Oct 9, 2011
610 posts
312 upvotes
EAST YORK

In the market for a new car - is it better to lease or finance?

My '05 Altima is giving out on me and I just can't tolerate continuing to pay for repairs every other month. Looking around for a decent new car, and trying to get an idea of whether it's better to lease or finance?
8 replies
Deal Addict
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Jun 26, 2011
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If you plan on keeping your car and the finance rates are good (0%), then finance. Otherwise, most cars now just aren't made to last as long as they used to be. If your finances would allow it, just keep leasing.
Deal Fanatic
Sep 6, 2007
6529 posts
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It depends on how long you want to keep the car for. If you plan on keeping it for years, finance. If you want to keep it for a few years and then find something new, lease. What type of car are you looking for? If BMW or something like that, lease.
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Nov 2, 2013
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Edmonton, AB
Depends on the exact numbers. There are terrible leases and good ones, and same goes for financing. Leases usually command a higher interest rate and the residual is often lower than what the vehicle will actually be worth, so outside getting into an accident and getting your resale dropped, or the model turns out to be problematic and hence has terrible resale down the road, they are usually more expensive.

The financial arm makes extra money assuming the risk of poorer resale for a variety of reason(s) for you. Or, you take a less expensive loan and assume that risk. Up to you.

Also depends on:
- How much you drive. Leasing is often out of the question if you rack up a lot of miles. If you drive very little, then makes more sense.
- Your income - if you have irregular or insufficient income, may have to put a lot of cash down for credit approval, where finance then makes more sense.

This is an extreme example, but Porsche has some of the highest residuals on the market, yet look at the difference of lease vs. finance.

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Jan 27, 2006
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Woodbridge
A few of my boys are leasing. Of course it will cost you more but you don't have worry about any headaches in terms of maintenence.

It was also mentioned here and I would but I tend to MOD my vehicles.
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[OP]
Sr. Member
Oct 9, 2011
610 posts
312 upvotes
EAST YORK
BluePhirePB wrote: It depends on how long you want to keep the car for. If you plan on keeping it for years, finance. If you want to keep it for a few years and then find something new, lease. What type of car are you looking for? If BMW or something like that, lease.
Probably not a luxury brand. Looking at mid-size sedans with some style, like the Mazda6 or the Kia Optima, something in that range. And yeah, I don't really need to keep it for years, I'm really just looking for cheaper monthly payments. Would lease be cheaper than financing?
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Sep 6, 2007
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baddoctor wrote: Probably not a luxury brand. Looking at mid-size sedans with some style, like the Mazda6 or the Kia Optima, something in that range. And yeah, I don't really need to keep it for years, I'm really just looking for cheaper monthly payments. Would lease be cheaper than financing?
For a car like that, I'd say finance is probably better. A lot of places are offering 0% financing up to X number of months. Are you planning to keep this car for a long time? You can choose to lease and the monthly payments will be lower but as others have said, rates may be higher. You may/may not have to worry about maintenance during that period of time (some manufacturers cover maintenance during a lease period) but you're usually restricted to 20,000 to 24,000 km/year. After the lease is over, you can either return the car or buy it out. If you choose to buy it out, it'll be more expensive than financing it from the get go.

EDIT: Re-read your post more clearly. If you're only gonna keep it for a few years, then lease is the better option. It'll definitely lower the monthly payment.
Member
Aug 25, 2006
210 posts
170 upvotes
Toronto
Best strategy is lease for duration of base warranty if interest rate is very low with intent to buyout if car tuns out be solid and perfect match to your needs.

Benefits:
-If car turns out to be a lemon walk away at end of lease free and clear.
-If it gets into an accident during lease period with significant damage you can return at end of lease (assuming proper insurance repair) and walk away free and clear instead of absorbing diminished value.
-If your needs change you an walk away free and clear without hassle of selling it afterwards privately.
-If cars market value is much higher then buybuck at end of lease (ie; you have much lower then average mileage, no accidents, etc) you can buyback and sell privately and earn back some equity for next car.
-If car is solid with no issues you can and probably should buyout.

Drawbacks:
-? Can't think of any. I guess only works when lease rates are low (near 1%). If lease rate is 3% plus probably not worth it.

I see leases as 3 year cooling off periods :-)
Deal Addict
Mar 16, 2015
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baddoctor wrote: My '05 Altima is giving out on me and I just can't tolerate continuing to pay for repairs every other month. Looking around for a decent new car, and trying to get an idea of whether it's better to lease or finance?
HOw many kms on that Altima?

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