If you’re looking into buying a new car, you’ve probably seen two options: leasing or financing. Both can get you behind the wheel, but the way they work, and what they could mean for your budget, is very different.
In this blog, the experts at Race Auto Group will break down the difference between car leasing and financing in Canada, so you can decide which one makes sense for your lifestyle.
What Does Car Leasing Mean?
Leasing a car is kind of like renting it for a longer period, usually two to four years. You make a monthly payment to drive the vehicle, but you don’t actually own it. When the lease is up, you return the car, unless you choose to buy it at the end.
How it works:
- You agree to a set term and mileage limit.
- The car has to be returned in good condition, or you may face extra charges.
- Payments are often lower than financing because you’re only paying for the time you use the car.
Why People Choose to Lease Their Car
Car leasing in Canada means you get to drive a newer car with lower monthly costs. The trade-off is that you’ll never build ownership, and you might face mileage or wear-and-tear fees.
What Does Car Financing Mean?
Car financing means that you’re taking out a loan to buy the car. You make monthly payments based on your car loan rates until the loan is paid off, and when you’re done, the vehicle is 100% yours.
How it works:
- Your payments include the loan amount plus interest.
- Loan terms in Canada are often anywhere from three to seven years.
- You can keep the car as long as you want once it’s paid off.
Why People Choose to Finance Their Car
When you apply for financing, you’re making a decision to build ownership. On the flip side, monthly payments are usually higher than leasing, but once you’re done paying, you no longer have that expense.
Lease vs Finance Car
Here’s how leasing and financing stack up side by side:
1. Ownership
Lease: You give the car back at the end of the term (unless you buy it out).
Finance: You own it once the loan is paid.
2. Monthly Payments
Lease: Usually lower, because you’re not paying for the full value.
Finance: Often higher, but they stop once the car is paid off.
3. Mileage & Wear
Lease: Limited mileage and condition requirements.
Finance: Drive as much as you want, no penalties.
4. End of Term
Lease: Return it, start a new lease, or buy it.
Finance: Keep, sell, or trade it in.
Which Option Fits Your Situation?
There’s no one-size-fits-all answer. Your budget, credit score, driving habits, and long-term plans all play a role. At Race Auto Group, we can help you figure out whether leasing or financing a used car is the best option to get you into a new vehicle.
How Race Auto Group Can Help
Choosing between leasing and financing doesn’t have to be complicated. Our team is here to explain both options in plain English, walk you through the numbers, and help you pick what actually works for your life.
Ready to Talk Numbers?
There’s no “right” answer for everyone, just the one that’s right for you. If you want to explore leasing or financing options and feel confident in your decision, we’re here to help.
Apply online today or contact Race Auto Group to see your options.
FAQs
Is leasing cheaper than financing?
Monthly lease payments are usually lower, but you don’t build ownership. Financing costs more per month but leaves you with an asset at the end.
Does leasing or financing affect my credit score?
Both can help build your credit if you make payments on time.
Are there penalties for ending a lease early?
Often, yes. Breaking a lease can mean paying extra fees.
What’s better if I have bad credit?
Financing a used car with bad credit can sometimes be easier to arrange, especially through lenders who work with all credit types, like Race Auto Group.
