# New Car Purchase - Cash or Lease?



## jargey3000 (Jan 25, 2011)

I've always been fortunate enough to be able to afford to buy my cars for cash on the barrel - and considered it the best option financially in the long run. Any reasons now, to change my thinking, and consider leasing?


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## AltaRed (Jun 8, 2009)

jargey3000 said:


> I've always been fortunate enough to be able to afford to buy my cars for cash on the barrel - and considered it the best option financially in the long run. Any reasons now, to change my thinking, and consider leasing?


Nope. Many leaseholders find they run up against the mileage limit of their lease or have wear and tear issues that will cost them at end of lease. If you are a high mileage type, buy your own. Or if a below average mileage type, owning and keeping for many years is a far better choice. I am a typical 10-15 year ownership type person. No lease offering can beat that.


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## jargey3000 (Jan 25, 2011)

....i'm entering my 9th year on my '07 elantra , with 93m km on 'er.....


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## kcowan (Jul 1, 2010)

Our record is a 93 Explorer with under 100k original miles one owner. We drove it to Mexico and left it there, so we have a 2005 Escape as our daily driver for 5 months.


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## stantistic (Sep 19, 2015)

I'm going with my 2003 Ford Ranger 44,000 km (one owner). Hope it will last me the rest of my earthly days.


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## ian (Jun 18, 2016)

97 Camry still going strong. 400K on the clock. No issues. Had the 2006 Accord for 8 years, plan on having it another 10 at least. Leasing has no advantage to us.


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## like_to_retire (Oct 9, 2016)

jargey3000 said:


> I've always been fortunate enough to be able to afford to buy my cars for cash on the barrel - and considered it the best option financially in the long run. Any reasons now, to change my thinking, and consider leasing?


No..........

ltr


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## DigginDoc (Sep 17, 2015)

Cash all the way. New Hondas 1990, 2004, and 2016. Still have the 2004 also.
Cheers
Doc


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## unbrako (Aug 9, 2017)

I'd never lease. If you are unable to repay a loan at least you own (or at least part own) the car and have soemthign to sell


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## CalgaryPotato (Mar 7, 2015)

I wouldn't consider leasing unless you really want a new car every 2 years, or you can write it off.

But as for finance vs. cash. Do comparisons... some of the finance deals are ridiculously good now. That is how most people buy, so that is where they concentrate their promotions a lot of the time these days.


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## sags (May 15, 2010)

A 0% interest loan is paying cash in installments.


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## AltaRed (Jun 8, 2009)

sags said:


> A 0% interest loan is paying cash in installments.


Only if that was a manufacturers incentive and not a dealer incentive. Otherwise, you could have gotten that cash deal a lot lower. The dealer is not a charity.


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## ian (Jun 18, 2016)

The last time I bought a new car was at a time when I could write off half of it against income. After five years I did all the mtce, new tires,etc. expensed half of it off on against income, and then moved it to my spouse for the remaining undepreciated capital cost amount. 

We bought new because I could get some write downs and because we planned to keep the car for a long period. We thought maybe 10 years. Turned out that it kept on running for 18 years, and then another 2 for my son. It does not owe us anything. Since then it has been used...3 years old, full load, low mileage. Worked for us.


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## My Own Advisor (Sep 24, 2012)

Just paid cash for my newer car. My 2000 Mazda finally gave in 3 weeks ago.
http://www.myownadvisor.ca/reasons-to-buy-a-used-car-instead-of-a-new-car/

I've learned to avoid borrowing money to buy a depreciating asset. Enough said. 

0% financing is a myth, there is no "free money". You need to do the math on the dealer's cash back incentive for buying a new car.


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## Puppito (May 18, 2017)

I financed my first car and didn't think I would ever lease, but that's what I ended up doing for my current car. It really depends on what you're able to negotiate with the dealer between leasing, financing, and a cash deal. My dealership wasn't willing to negotiate much on financing the vehicle but I was able to negotiate a near-$0 lease rate and on the buyout amount at the end of the lease. For pretty well the same monthly payment, my purchase price at the end of the lease is less than what I would have owed on my loan at that same time. For this car, leasing made sense and added flexibility if I decided I didn't want to keep the car at the end of its term (though I'll likely buy it out and drive it another 4 or 5 years). I also upped the annual mileage limit for a few dollars a month (I'll never reach it but it was worth it for the peace of mind knowing I won't have a big balloon payment at the end of my term).

If you have the cash you should see what kind of discount the dealer is willing to offer. If it's substantial then a cash deal would make sense, but if it's not then with these low rates you might be better off to finance or lease and invest your cash, if you don't mind having a monthly payment.


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## My Own Advisor (Sep 24, 2012)

I think low-cost financing is a decent alternative to paying cash for a car. 

I've never understood the big advantages of leasing (over buying) unless it's a company car you can have business expenses associated with it. Maybe I just don't know where all the advantages exist?


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## sags (May 15, 2010)

Leasing is the same as buying, except there are lower monthly payments and a balloon payment at the end of the term.

The determining factor is different interest rates for financing and leasing.


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## Puppito (May 18, 2017)

Where I live the dealerships won't negotiate much on list price when you're buying or financing a car. I was able to negotiate more on the buyout value of the car at the end of the lease than I was on the list price, which inherently reduces my overall purchase price if I buy the car at the end of the lease. That, plus the lower interest rate made leasing more attractive to me than financing. Towards the end of my lease I can also see the going price for my car to see if buying it out makes sense (if the value of the model decreases significantly then I'll be better off buying a different used car for cash, though so far it seems to be holding its value well).


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## ian (Jun 18, 2016)

I assumed a lease in year 2 of a 3 year lease a number of years ago. A friend's employer was closing their office and about to return his car to the leasing company.

I did a NPV on the remaining payments and on the buyout. Compared that to the current resa;e prices and then made a decision to move forward. Financially it was a good decision.


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## Plugging Along (Jan 3, 2011)

Generally buying it out right with cash is the best option. We are in the process of buying vehicle because the ur last one was just written off in an accident. We usually negotiate the best price we can, then when talking about financing we ask for a cash discount. If not, then we try to put as much on our credit card as possible for points.

In terms of leasing, our accountant has recommended it for our business as you can write off the whole lease, however because we keep our vehicles for a long time, she said it was a wash.


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## CalgaryPotato (Mar 7, 2015)

My Own Advisor said:


> I think low-cost financing is a decent alternative to paying cash for a car.
> 
> I've never understood the big advantages of leasing (over buying) unless it's a company car you can have business expenses associated with it. Maybe I just don't know where all the advantages exist?


I think a lot of the people who buy a new car every two years, and do a trade in on their old one (and a lot of people do that) would do better off leasing.


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## Jimmy (May 19, 2017)

Plugging Along said:


> Generally buying it out right with cash is the best option. We are in the process of buying vehicle because the ur last one was just written off in an accident. We usually negotiate the best price we can, then when talking about financing we ask for a cash discount. If not, then we try to put as much on our credit card as possible for points.
> 
> In terms of leasing, our accountant has recommended it for our business as you can write off the whole lease, however because we keep our vehicles for a long time, she said it was a wash.


I don't know if leasing is any better for a business necessarily. In an operating lease you get say 30% (tax rate) back through the tax deduction depending on your tax rate. In the end you don't own the asset though.

Under a capital lease, you can write off the cost through Capital Cost Allowance CCA similarly at 20-100% /yr on a declining balance depending on the asset so that is a wash but in the end you own the asset.


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## Plugging Along (Jan 3, 2011)

Jimmy said:


> I don't know if leasing is any better for a business necessarily. In an operating lease you get say 30% (tax rate) back through the tax deduction depending on your tax rate. In the end you don't own the asset though.
> 
> Under a capital lease, you can write off the cost through Capital Cost Allowance CCA similarly at 20-100% /yr on a declining balance depending on the asset so that is a wash but in the end you own the asset.


This is where it depends and there some unique situations that leasing is better. Our accountant did our full break down. Running the numbers if a person switches their vehicle fluently for their business, they can write off the full lease amount. If you don't plan to keep your vehicle afterwards, then the full lease is better than taking a declining coca for the first I think it was 4 to 5 years. As I said we keep over vehicles much, even for our business, therefore it was better just to buy it. For some businesses where they go through their vehicles quickly, is lease may be the way to go. 

Generally, almost all individuals are better to buy and some businesses. Just presented different scenarios,


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