When to lease or buy a new vehicle

Auto expert George Iny on how to pay for a new car.

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From the November 2013 issue of the magazine.

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Q: “What is cheaper, leasing or buying a new vehicle?”

—Pierre Rioux, Laval, Que.

A: First you need to ask yourself how long you plan to keep your car. Changing cars frequently costs more than keeping one until it wears out. So the cheaper solution is to keep your vehicle a long time, well after the end of your payments, to reduce the loss from depreciation, which is always highest in the first five years. In almost all cases, this makes ownership the less expensive proposition. If you’re planning to change vehicles frequently, leasing is usually less expensive than buying to resell yourself in three or four years, but you’ll pay a premium for the prestige of getting a new vehicle so often. In that case, the most important benefit of leasing is that the automaker—and not you—takes the gamble on the resale value.

George Iny is the president of the Automobile Protection Association. Send him your automotive questions at ask@moneysense.ca

 

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