The cost of leasing a car doesn’t necessarily vary significantly from one month to the next purely based on the calendar. However, there are certain periods where you might find better deals or incentives on leases, due to various reasons:
- End of the Calendar Year: Many dealerships are keen to meet year-end sales targets in December, and to clear out current year’s inventory to make way for next year’s models. This can often lead to enhanced incentives or discounts on leasing.
- Model Year-End Sales: This varies by manufacturer and model, but when the new model year vehicles are set to arrive (typically late summer or early fall), dealerships may offer incentives to clear out the previous year’s models.
- End of the Quarter: Some dealerships have quarterly sales goals. The end of March, June, September, and December might see slightly increased incentives as sales teams strive to meet their targets.
- Holiday Sales Events: In North America, certain holidays, such as Memorial Day, Fourth of July, Labor Day, and Black Friday, are often accompanied by sales events, which can sometimes extend to lease deals.
- Slower Sales Months: Historically, winter months (excluding December) like January and February can be slower for car sales in many regions due to the weather and post-holiday financial fatigue among consumers. Dealers might be more inclined to negotiate during these times.
- Manufacturer Incentives: Sometimes specific models might have leasing incentives due to overproduction, decreased demand, or upcoming redesigns. These incentives can pop up at any time, so it’s beneficial to stay informed.
To get the best lease deal:
- Research is essential. Keep an eye on manufacturer and dealership promotions.
- Negotiate the purchase price of the vehicle, even if you’re leasing. The lease cost is often based on this price, so getting it down can reduce your monthly payments.
- Be aware of lease terms, such as mileage limits and wear and tear guidelines.
- If possible, wait for a promotional period or leverage information about upcoming sales to get a better deal.
Lastly, it’s crucial to understand that while getting a good deal is essential, you should also ensure that the vehicle fits your needs and that you’re comfortable with the terms of the lease.
What is the most expensive month to start a lease?
In Canada, there isn’t a universally recognized “most expensive month” to start a lease. However, there are certain times of the year when you might find fewer deals or incentives on car leases.
- New Model Arrivals: When the newest model years of vehicles start to roll into dealerships (often around late summer or early fall), there might be less incentive for dealers to offer aggressive lease deals on these brand-new models since they are in high demand.
- Peak Buying Seasons: The spring and early summer months can see higher demand as the weather improves and consumers are more willing to go car shopping. As a result, dealers might not feel the need to provide as many incentives during these peak buying seasons.
- End of Year Exception: While December can be one of the best times to get a deal due to year-end sales targets and the desire to clear out old inventory, the beginning of December might not be as lucrative as the very end when dealerships are making a final push to hit their annual numbers.
- Limited Manufacturer Incentives: The availability of manufacturer incentives (like rebates or special financing rates) can influence lease prices. If manufacturers are not offering many promotions in a particular month, leases might be more expensive.
- Economic Factors: External factors, such as economic downturns, rising interest rates, or other macroeconomic conditions, can influence leasing costs.
However, it’s essential to note that the overall difference in cost from one month to the next might not be substantially high, but over the entirety of a lease term, even a small difference in monthly payment can add up.
Is it cheaper to buy or lease a car in Canada?
Whether it’s cheaper to buy or lease a car in Canada depends on several factors, including your financial situation, driving needs, and how you value ownership versus the flexibility of leasing. Both options come with their pros and cons. Let’s break them down:
Leasing a Car:
- Lower Monthly Payments: Lease payments are generally lower than loan payments for purchasing a car because you’re only paying for the depreciation that occurs during the lease term and not the car’s full value.
- Drive Newer Cars More Often: At the end of the lease term, which is typically 2-4 years, you can return the vehicle and lease a new one. This allows you to always drive a relatively new car with the latest features and technology.
- Warranty Coverage: Since most leases are short-term, the vehicle is often under warranty for the duration of the lease, reducing unexpected maintenance costs.
- Lower Upfront Costs: Leases often require a smaller down payment than purchasing a vehicle.
- No Ownership: At the end of the lease term, you don’t own the car. You’ll need to lease another car or make a buyout payment to keep the one you’ve been driving.
- Mileage Restrictions: Leases come with mileage limits, and exceeding them can result in costly fees.
- Potential for Additional Charges: You may face charges for excess wear and tear when you return the vehicle.
- More Expensive in the Long Run: Continuously leasing vehicles typically costs more over time than purchasing a car and keeping it for many years.
Buying a Car:
- Ownership: Once you’ve paid off the loan, the car is yours. You can keep it for as long as it runs, sell it, or trade it.
- No Mileage Restrictions: You’re free to drive as much as you want without incurring penalties.
- Customization: You can modify or customize your vehicle as you see fit.
- Potentially Cheaper in the Long Run: If you keep the car for several years after paying off the loan, you’ll spread the cost over a longer time frame.
- Higher Monthly Payments: Loan payments for buying a car are typically higher than lease payments because you’re paying off the car’s entire value.
- Depreciation: Cars lose value over time. By the time you pay off the car loan, your vehicle’s value will have dropped significantly.
- Maintenance Costs: As the car ages, maintenance and repair costs can increase, especially once it’s out of warranty.
If you enjoy driving a new car every few years, don’t drive excessive miles, and want lower monthly payments, leasing might be the better option for you. However, if you plan to keep the car for a long time, drive a lot of miles, and want the freedom of ownership, buying is likely more cost-effective in the long run.
It’s essential to consider the total costs over time, including potential end-of-lease fees or long-term maintenance costs for older vehicles, when making your decision. Always consult with financial advisors or experts when making significant financial decisions.
Is it cheaper to lease, and then buy out the car?
Whether it’s cheaper to lease a car and then buy it out (often referred to as a “lease buyout”) compared to purchasing the car outright from the beginning is influenced by several factors. Let’s discuss the different aspects:
1. Interest Rate (or Money Factor for Leasing)
- Leasing firms might offer attractive lease rates or “money factors” that can translate to a lower overall borrowing cost than traditional auto financing. However, this is not always the case, and it’s essential to compare both options.
2. Residual Value
- At the beginning of the lease, the lease agreement will specify the car’s expected value at the end of the term, known as the “residual value.” This value, combined with any fees, will generally be the buyout price. If this estimated residual value is set higher than the vehicle’s actual market value at the end of the lease, you might end up overpaying if you decide on a buyout. Conversely, if the residual is set lower than market value, you could get a good deal.
3. Upfront Costs and Fees
- There might be costs and fees associated with starting a lease (such as down payments, acquisition fees, etc.) that could make leasing less attractive. Additionally, buying out a lease can also involve fees.
- Leasing then buying provides some flexibility. If you decide you don’t like the car, you can simply return it at the end of the lease. However, if you finance a purchase from the start and want to sell or trade the car early, you might be faced with negative equity.
5. Total Cost Comparison
- It’s crucial to calculate the total cost of both options. For leasing then buying, this would include all lease payments, any applicable fees, and the buyout amount. For purchasing, it would be the total of all loan payments.
There isn’t a one-size-fits-all answer. Whether it’s cheaper to lease then buy a car compared to buying it outright can depend on the specific lease and purchase terms, the car’s depreciation, market conditions, and how well the car is maintained.
For those who are uncertain about long-term ownership or the specific vehicle’s suitability for their needs, leasing can offer an “extended test drive” with an option to purchase later. But, always remember to thoroughly review and compare all associated costs and terms before making a decision.
In any scenario, it’s recommended to negotiate the best possible deal (whether it’s the initial purchase price or lease terms), as this can significantly impact the overall cost of the vehicle in either scenario.