The Pros and Cons of Leasing and Financing

It’s an age-old dilemma that’s been weighed by many a car shopper. To lease or not to lease, that is the question. OK, so we’re borrowing that line, but seriously, SO MANY people ask this!

Unfortunately, there’s no one-off answer. Depending on your situation, either could work. Here’s a list of pros and cons to help you make the right choice for you and your car.  

Financing Pro: You own it.

One of the biggest benefits of financing is that you own the vehicle, and as long as there aren’t any issues with you paying off your loan, you can do whatever you want with it without having to wait. If you want to profess your love for kitty cats on the doors, there’s nothing stopping you. Except maybe common sense and concern for resale value.

Also, once that loan is paid off, that’s it. It’s yours! You don’t have to make any more monthly payments, ever…or until you want an upgrade, of course. Then you do it all over again.

  With leasing, you’re essentially renting the vehicle, and at the end of your term you can return it or fully purchase it, which might suit your needs more if you only need a car for a few years but don’t necessarily want to buy one. At the end of your lease, you also don’t have to worry about selling the vehicle, you can just hand the keys back to the dealership, and get a new lease agreement with a sick new ride.  

Leasing Pro: It can be cheaper over the short term

Compared to financing, leasing is a cheaper option because instead of paying for the entire vehicle in installments, you’re only paying for the depreciation on the vehicle during the timeframe you’re leasing it for. Lease agreements also tend to have lower down payments, leaving you with more cash for doing the fun stuff you’re driving to do. Financing will be a little pricier during the payment period because your payments go towards the full price of the vehicle. And yes, this is a picture of Monopoly money, because your finances aren’t a game, unless they are.


Leasing con: There may be distance restrictions

Leasing can come with a restriction on how much you can drive the vehicle per month. The number itself is usually negotiable when you decide the terms of the lease, and if you go over it you will have to pay extra, the same way you have to pay extra if you go over your data limit on your phone plan.

With financing, since the vehicle is yours, you can go from one end of the Trans Canada Highway to the other and back every month if you’ve got the gas money. Just keep an eye out for wildlife.


Financing con: depreciating vehicle value

The great thing about leasing is that once your lease is up, you can sign a new agreement with a brand-new vehicle, so you really don’t need to worry about the long-term value, unless you decide to buy it after all. Of course, if the vehicle’s value is depreciated too much by wear and tear, you will probably have to pay extra for it, but otherwise leasing means you don’t have to worry about what it’ll be worth years down the road. In the end you return the vehicle and don’t have to so much as think about selling it. Since with financing you own the car, you’ll have to keep the resale value in mind and know that the value of your vehicle is going to go down over time. You won’t have to pay any extra fees for wear and tear, unless you decide yourself that something needs fixing. Then there’s the process of selling of the vehicle. Alternatively, you could always keep your vehicle for years and years and hope that it will someday be considered a classic car, but that’s not the most dependable business plan.


Again, both ways of paying for a vehicle have their benefits and downsides. It really depends on your needs, specifically, whether or not you want to own the vehicle and what your plans are for its future. If you don’t want or need the responsibilities that come with owning a vehicle, leasing is a great way to make sure you can still get around. On the other hand, financing might be a little pricier, but in the end, you do own the vehicle and that gives you an autonomy you won’t get with leasing.

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