Leasing A Vehicle

Leasing a Vehicle can be a great option that is often overlooked. We are commonly told growing up that leasing is a bad idea or that you should always finance to purchase your vehicle. There are a lot of Leasing myths that are still told today. With the uncertainties that arise from the changing world around us, leasing a car can offer a safer solution. Just ask yourself, “What will you be doing in five years from today?

The first step into looking at a lease is understanding what a lease is. Looking at the benefits compared to a financing option and looking beyond the numbers. There is always a risk with any financial decision, and a lease might be the right solution for your life here in Red Deer, Alberta.

What Is a Lease?

When you choose a vehicle lease option instead of purchasing the vehicle, you agree to “rent” the vehicle for a specific rate for an agreed-upon amount of time. Leasing does not require a loan approval or large down payment; instead, unlike your typically financing options, the payment goes toward using the car or truck instead of the vehicle’s ownership.

Basically, you are looking at a long-term rental that can be as short as two years and as long as six years. Once the term-ends, you will have an option to either purchase the vehicle (at market value), lease or finance another Toyota vehicle or return the vehicle provided in your lease.

What are the benefits of leasing a car, SUV or truck?

• When leasing a vehicle, the main benefit is a lower monthly payment than financing. Some people who can afford to purchase a vehicle outright will actually choose to lease instead.
• You drive the vehicle during its most trouble-free years. Often major maintenance that is needed during a car’s lifecycle will happen after the vehicle lease term. Things like timing belts, for example, are typically required after 100-140 thousand kilometres*.
• Having a nicer vehicle compared to what you would be able to afford if financing. Maybe you don’t want to deal with a cold steering wheel when the weather drops well below freezing, which is typical for Red Deer, or perhaps you would like to be able to park your vehicle safer with a 360-degree camera system.
• When you usually trade-in your vehicle, the car’s worth can fluctuate dependent on the current market. When leasing, you don’t need to worry about the fluctuating price at trade-in or go through the hassle of selling the car, truck or SUV.
• If you are a business owner or self-employed, there also tax advantages that you might take advantage of. For instance, you can deduct up to $800 per month plus GST, which works out to an annual total of $9,600 (Make sure to check current tax incentives that apply to you).
• At the end of the lease, you can drop the car off at the dealership. Maybe the vehicle was not right for you, or it didn’t have the space you think you needed. When leasing, you aren’t tied to the car for the long term.

FAQ About Leasing:

Q: Does leasing a car increase your insurance?

Leasing a car does not increase your insurance cost. You are required to protect the asset (the vehicle) you are leasing and are required to have collision and comprehensive insurance.

Q: Does leasing a car help your credit?

One of the biggest advantages is the positive impact leasing a car can have on your credit. Keep in mind this advantage only comes if you are making your payments on time.

Q: What does residual value mean?

The residual value is the market value of the leased asset (the vehicle) after the lease term has ended. Basically, it is the price of the car if you wish to purchase it after your lease period.

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