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Car Loans Vs. Leasing: Which Is Better?

08/13/2019 @ 5:45 am


Three mean discussing something around a table.

Whether or not you’re interested in a car because it’s fun, because you need it, or just because you’re taking the first step on your financial journey as an adult, one of the most crucial factors that are going to come into play is the terms of the car loan in Oshawa you can secure. Since there are very few of us indeed who can afford to pay for a car upfront and skip the loan process altogether, for the vast majority of the automobile-using populace, financing plans are going to be less an added plus and more of a necessity.

But even once we know that we’re all going to need some kind of loan, there are still a ton of questions that come rapidly to mind when we start to think about all of this. For one thing, the terms of the car loan in Oshawa you’ll be able to secure for yourself are going to rely heavily on your credit score, which is a shame in a sense but also has solid logic behind it, so it’s best to just accept it as a regrettable facet of reality and move forwards.

However, that’s not where our narrative ends. While it’s a given that a car loan is going to be a practicality we can’t avoid for most of us, there’s also the age-old debate between whether or not it’s better to loan your car, in the classical sense, or to lease it, which is a slightly different concept. Depending on which of these options you end up going for as a means to finance your car loan in Oshawa, you’re going to want to prepare and behave drastically differently.

Too Much Data

Another problem is that upon trying to research this essential question, it’s easy to get overwhelmed by the sheer amount of choice available on the internet. A single google search turns up tens of thousands of answers in the form of a metric ton of articles, each of which seems to be convinced that they have the right answer. How on earth are you supposed to carry out your due diligence and research this area properly when there’s so much choice to choose from?

That’s why we’ve decided to break down, once and for all, what exactly the differences are between loaning and leasing when it comes to securing your car loan in Oshawa. We’ll first discuss what exactly the difference is between loaning and leasing (because it’s not always straightforward, or at least not as straightforward as it should be, given that when you get down to it the difference isn’t a complicated one), and then we’ll attempt to dive a little deeper into the topic and consider some of the pros and cons of each choice, with the eventual idea of arming you, the reader, with all the information you’ll need to make your own informed decision next time you go about trying to secure a car loan in Oshawa.

Without further ado, let’s get into it. Here’s car loaning vs. leasing: which is better?


Somebody signing an agreement.

The main difference between the two is that when you’re leasing a car, you’re paying for the depreciation of the vehicle throughout the time you spend on the lease, rather than the whole vehicle cost. Another point is that when you’re done with the car, you just hand the keys over to the dealer and acquire yourself a new lease: you don’t need to worry about selling the car.

This has a few obvious advantages and disadvantages, right off the bat. For one thing, cars are depreciating assets that lose value as soon as the wheels start turning. It’s an unfortunate reality for many of us automobile enthusiasts, but it’s a reality all the same. So when you’re loaning a car with the intention of eventually buying it, not only are you paying money towards it every month (as well as paying interest rates, which money doesn’t go towards the value of the car but simply works to offset the risk incurred by the person who’s lending you the money in the first place), you’re doing all of this just to, eventually, hopefully sell the car for much less than you wound up paying for it.


With leasing, that isn’t the case. Because you’re paying for the depreciation of the value over the years, you don’t need to worry about drastically losing value because you’re not going to be the one selling the car at the end of the day: you’ll just trade it in and get a new lease. Seen through that perspective, leasing looks like a much more attractive prospect than a typical car loan, both financially and in terms of avoiding unnecessary stress.

Another advantage of leasing is that the monthly payments are always lower than the equivalent monthly payments you might have to deal with in regards to a car loan in Oshawa, for example. This is the case because when it comes to buying a car, the most cost-effective way to two it is upfront. If you can buy yourself an automobile right off the bat, you’re saving yourself any kind of financing scheme, as well as all of the interest rates and assorted other payments that come as part and parcel of that particular deal.

After buying it upfront, leasing a car is the most cost effective option, because you don’t need to worry about selling it again at the end. Lastly, the most expensive option is loaning a car in the traditional sense you were probably thinking about when you were contemplating getting yourself a car loan in Oshawa.

One plus of financing the car with a traditional car loan in Oshawa kind of deal is that each payment you’re making on a financed vehicle builds equity. Granted, the vehicle is depreciating, but given the fact that that’s going to be true of every automobile, no matter where it is or how the driver is financing it, we can effectively brush that to one side and quit mentioning it. It’s a given, basically, so there’s no point in continually rehashing it. Once the car is completely paid off, it’s yours to own and you can do anything you like with it, whether that’s selling it, donating it, or trying it in for another model later on.

Which Is Best For You?

Now that we understand a couple fundamental differences between the two main concepts of leasing and loaning, we’re going to go into some of the factors that will wind up affecting whether to not leasing is the best option for you, or whether it’s best to secure yourself a car loan in Oshawa as a means of financing the vehicle. Of course, nobody knows the ins and outs of your situation like you do, which is why this article is simply trying to get you started asking yourself the biggest questions when it comes to making the decision, so that you can make the healthiest financial choice for you and your family.

Extra Miles

One of the first, most crucial points to consider when attempting to figure out which option you should wind up going for is how much you drive. Many lease agreements have a set number of miles written into the paperwork. Any mile you drive over that is going to cost you extra money. While the usual charge is between 15 and 20 cents a mile for additional miles, it’s possible to buy some additional miles upfront at a bulk price reduction if you know for a fact that you’re going to be using them anyway.

While this does sound a little daunting (after all, who can tell ahead of time how many miles they’re going to be driving?) And there’s nobody who wants to be paying for extra miles, it’s worth noting that if you’re planning on trading in a car you bought using a typical financing scheme (like a car loan in Oshawa), you’d be charged for extra mileage just the same. It’s an unpleasant aspect of owning and operating an automobile, but there’s just no point ignoring it, because that’s how it is.

So, if you know for a fact that you’re going to be driving a lot, your best choice is to either mention that upfront when you sign the lease agreement and get a certain number of additional miles at a discount, or you might just be better off opting for a traditional agreement, like a car loan in Oshawa would typically present.

Cash Flow

Another important concept to keep in mind when you’re deciding between a lease agreement or a more traditional car loan in Oshawa financing plan is what kind of monthly income you have to work with. Because you’re paying for the depreciation of the vehicle during the months and years you have the lease as opposed to the vehicle’s cost itself, the amount of money you’ll have to pay every month for a lease is going to be significantly lower than a typical financing plan, because in the latter scenario you’re paying for the value of the car itself.

If you have plenty of cash going spare every month, then there’s no reason not to finance your car using a typical car loan in Oshawa kind of situation. If, on the other hand, you’d like access to more money on a fluid, monthly basis, it could well be worth your while signing a lease agreement of some sort, because you’ll have more money liquid in case you need it.

Are You A Good Driver?

A shot from behind of yellow cabs.

One final question to ask yourself (and it’s best to be honest about this one, even if it is a little unpleasant), is how hard you are on the car you drive. If you have a tendency to incur scratches and buff marks, it might be best to pass on the lease, because of the expensive wear-and-tear fees that are often included in the overall agreement. If you’re able to keep the car pristine, you won’t have any issues with this, but we’re not all as careful as we might like to be, so it really does help to be frank when you’re considering this question.

By Way Of Summary

There you go: three main things to consider when you’re trying to weigh up whether you want to finance your car with a lease agreement, or whether you want your car loan in Oshawa to be a more typical financing plan. Of course, this is only the tip of the iceberg, but we do hope that you’re a little better prepared now for having read this article.

As a final point, if you’re having trouble getting approved for a car loan in Oshawa, give us here at a call. We consider every application for a loan we receive, and we’d love to help you out in your current situation.


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