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Here are a few things you should keep in mind when weighing your options to either buy or lease a vehicle:



  • Long-term gain
  • The cheaper option if you keep the vehicle for a long time
  • Buyers can often get interest rates as low as zero per cent with certain terms
  • The car is an asset once the loan is paid
  • Price includes other charges (freight, PDI, administrative fees, etc.)


  • Short-term gain
  • Monthly lease payments are lower than financing payments
  • Interest charges are usually higher on a lease.
  • You never own the vehicle
  • Price includes other charges (freight, PDI, administrative fees, etc.)



  • You decide when to replace your vehicle
  • You can lower the average annual cost of the car by keeping it longer
  • If you don't like the car, you can sell it at anytime
  • You can sell the car to anyone at the market price for the vehicle
  • No restrictions or repair standard, but excess driving and poor vehicle condition can lower resell value significantly


  • You get a new vehicle every 3-4 years
  • Lease terms are shorter than the period most people own a car
  • Breaking a lease can be difficult and usually means paying penalties
  • Leasing company’s permission needed to transfer the lease to another individual
  • Possible penalties for going over amount of allowed kilometres and for the condition of the vehicle when it is returned.

Likewise, here are a few tips and other important information to keep in mind when looking to buy or lease a vehicle:


Research, research, and more research

Making the best decision when it comes to buying or leasing a vehicle involves lots of research.

Make sure you know the kind of vehicle you need and the ways you will be using it before you visit a dealer. Even a great vehicle can make you unhappy if it doesn't meet your needs.

The Automobile Protection Association's Lemon-Aid Guide (, and (in French only) have detailed information on how well new and used vehicles perform as well as their reliability and safety. They may charge a fee for the service. Consumer Reports also offers a similar service.

Carefully consider your financing options

The amount of the factory rebates, dealer discounts, or incentives can vary considerably depending on the way you choose to finance the purchase. So, be sure to explore the different finance rates and cash incentives offered to ensure you get the best deal that fits your budget.

Several websites offer detailed information on the various manufacturer incentives available for specific new vehicles for a small fee and can supply the wholesale price the dealer pays the manufacturer for its cars. These services can help determine a reasonable purchase offer for a wide range of vehicles when negotiating with dealers

The final monthly payment depends on the length of the term and the amount of the down payment. Remember that a larger down payment can significantly reduce the amount paid every month when you finance the purchase. It is often cheaper to take a cash rebate and finance the vehicle through your bank.

Before choosing a finance or lease option, you should agree with the dealer on the selling price.

Be completely sure before you sign

In most almost all provinces, there is no cooling-off period when you buy or lease a vehicle. You can check with your provincial or territorial transportation ministry to find out if there is a cooling-off period available to you. So, be sure you understand all the costs outlined in the lease and your responsibilities under the agreement before you sign on the dotted line. Make sure to read all the fine print.

The agreement should include the amount of your trade-in, the financial terms, the down payment amount, the cost of options, any restrictions (for a lease), taxes, freight, pre-delivery inspection, and the cost of add-ons such as rust protection or upholstery treatment.

Except in some rare and extraordinary circumstances, such as the seller hiding a major defect, the contract you sign to buy or lease a vehicle is binding*. That means that once you sign, the dealer is usually not obliged to let you out of the contract if you change your mind.

*As of 2010, dealers in Alberta, British Columbia, Manitoba, Ontario and Saskatchewan are required to make several mandatory disclosures when selling a used vehicle. Failure to do so may give the buyer a right to cancellation of the contract.

Get the best price

Buyers can now get detailed information on the Internet about vehicle pricing and dealer costs. You can use information on the dealer’s cost and any incentives available to figure out the dealer’s mark-up. The more you know the better chance you have to get a fair price.

The best way to reduce a monthly payment is to get a lower selling price from the dealer.

Look for rebate and incentive programs from the automaker. Christmas, spring time and end-of-model clearances are often good periods for rebates and promotions.

Although low monthly payments can make it easier to buy a vehicle, always remember that buying or leasing a vehicle it is still a big financial commitment.

Spreading loan or lease payments out over a longer period of time may lower the monthly cost but may also increase the total amount paid due to higher financing costs.

Get the highest value for your trade-in

Get a firm selling price from the dealer before you talk about a trade-in.

There is no set price for a used vehicle and you should shop around to get the best deal using your trade-in. While one dealer may put a higher value on your trade, remember that the lowest final overall cost for the new vehicle should carry more weight.

Dealer vs. Manufacturer

Before you start negotiating, it is important to understand who can do what. No matter how you pay for a vehicle, you buy it from a dealer and not a manufacturer.

Dealers can decide to lower their profit margin and offer a lower price on the vehicle or offer to absorb some of the add-on costs associated with the purchase.

In the case of a lease, you may be able to buy additional kilometres to raise the allowable mileage. Additional kilometres can usually be purchased upfront at a lower cost than the amount of the penalty you will pay at the end of the lease if you return the car over the set kilometre limit.

Other important information


While those who lease only pay tax on the lease payments, saving money in the long run is usually not the case.

Although buyers pay all the taxes up front, it is important to remember that the average car ownership in Canada is eight years, which is roughly equal to two lease terms. So, those who lease will pay tax on monthly payments for the entire time they have a car and they also do not get the benefit of using a trade-in to reduce the taxable amount on the next vehicle purchase.

Flipping a Leased Car for a Profit

There is a common misconception that it is easy to make a profit by buying out the lease and immediately reselling the vehicle.

Although it is difficult to predict the future value of a vehicle, it is generally unlikely that you can pay all the taxes and fees required when a leased vehicle is purchased and then sell it for a profit.

Buying a vehicle for the purpose of reselling it will incur double sales taxation; first to you and then to the next buyer. Most lessors will not allow the person who signed the lease originally to assign their option to another person in order to avoid double taxation. If they do, a hefty handling charge is likely.

Lease penalties

Excess mileage

Leases usually have a fixed allowance for kilometres travelled. It is usually cheaper to prepay for any kilometres you might drive over the set amount during the lease rather than pay the penalty for exceeding the allowance when you return the car.

If you don't plan to use the vehicle often, some dealers might offer a low kilometre lease which may have a lower monthly payment. There is no credit for unused kilometres if you don't use the full amount allowed by your lease.

Unless you buy the vehicle at the end of the lease, there is usually no benefit for returning the car under the kilometres limit set in the agreement.

Vehicle repairs

When you sign a lease, it will include a "repair standard," which outlines the condition the car must be in when the lease expires and it is returned to the dealer.

This relates to wear and tear on the vehicle as well as accident damage. The leasing company sets the repair standard, which is outlined in the lease contract.

When it is time to return your car, take photos of any cosmetic damage and get estimates before returning the vehicle. This evidence may help you negotiate with the automaker or leasing company if you feel you are being overcharged for repairs after turning in your leased vehicle.

In some cases you may be better off attending to cosmetic repairs before turning in the vehicle. For example, most interior damage like holes, tears and cuts can be repaired. The lessor will likely replace an entire seat cover or trim panel instead of charging for its repair.

Visit the Automobile Protection Association website for a list of guidelines on how to approach repairs most effectively.

For a lease term that runs longer than the warranty on the vehicle, it may be useful to consider buying an extended warranty to deal with some issues when it comes to wear and tear. Extended warranties may also cover some repairs once the original warranty expires.

Extended warranties sold by the manufacturer of the vehicle you are leasing or buying are usually more complete than warranties from independent companies. Most new car dealers sell both.

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