Lease vs Buy

Lease vs Buy

A client approached me with this question the other day. Ahh, the age-old question that really doesn’t have a “right” answer. There are pros and cons to each option that make it very personal to your situation. That said, there are things to consider that may help make the decision given your own circumstances.

Ask yourself how often you replace your vehicle. If it’s not often, then you may want to consider purchasing/financing. If you prefer replacing your vehicle more often (i.e. every 4 years), then it may make sense to lease and accept that you will have a perpetual car payment.
What the are financing details? If the rate is higher than 5 – 6%, then it may make sense to purchase the vehicle with cash. If the rate is closer to 4% or less, then I would consider investing the money (i.e. TFSA). You’re likely to average a higher after-tax rate of return on your portfolio over the financing rate. Your current cash flow would determine how much you would need to put down to lower the periodic payments.

Do you prefer to drive a newer vehicle? Leasing may be ideal for you as long as you anticipate driving less than the prescribed kilometres. Lease rates are typically less than financing rates, so if you were to lease, it makes sense to put the least amount of money down to get the periodic payments to a comfortable level and invest the remainder.

If you are in this position and would like to talk out the particulars, don’t hesitate to contact us at the office.

Related articles

The Financial Implications of Divorce

In this episode of Think Smart with TMFG, Rob McClelland and Mike Connon unpack the unavoidable financial challenges of divorce. They paint a detailed picture of financial complexities that couples should be aware of at the onset and conclusion of a …

Read More →

Episode 29: Becoming A Great A Client Takes A Little More You Might Expect

Becoming a good client requires a great advisor. The importance of having sound advice and taking it. Savers vs. spenders and what it can mean to the future of your plan. The importance of goal setting and finally muffins are they really where it’s a…

Read More →

Episode 33: Technology: Making Us Way Better At What We Do!

Technology has had a huge impact on financial services. Market efficiencies are translating to enormous benefits for clients. Listen here today for more insights in part 2 of our debrief of DFA’s Charlotte, NC conference.

Read More →

Financial Planning Advice from Canada's Top Financial Advisors

Sign Up To Receive Email Updates On The Financial Industry And Complimentary Workshops.

By providing your e-mail address you provide The McClelland Financial Group of Assante Capital Management Ltd. with your express consent to send you electronic communications. If you choose to discontinue receiving e-mails, you may withdraw consent by contacting [email protected].

FREE RESOURCE

Get actionable financial insights from the Top financial planners in Toronto.

Toronto's Top Financial Advisors
Copyright Assante Wealth Management. © 2022

Disclaimer | Assante advisory services are offered through Assante Capital Management Ltd. Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. The services described may not be applicable or available with respect to all clients. Services and products may be provided by an Assante advisor or through affiliated or non-affiliated third parties. Some services and products may not be available through all Assante advisors. Services may change without notice. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

We have a team of advisors each specializing in varying portfolio sizes. Please let us know the approx. amount of your investable assets to help us to direct you to the advisor that is best suited to you.