Why leasing maybe be an option to look at…
With leasing you are agreeing to pay off a certain portion of the vehicle’s value over a certain amount of time. For the purpose of this example we will say the interest rate is 0%
- $20,000 vehicle 5 year finance to pay off the vehicle in full $333.33/month payments
- $20,000 vehicle 5 year lease (with 40% residual) the payments would be $200.00/month
If you are very payment conscious you can see how this would help keep your payments as low as possible.
Typically at the end of the lease you are able to turn back the vehicle (assuming you kept within the km limits), or you can pay the remaining amount (you also may be able to finance that amount).Pros:
- A lot of customers like leases because it allows them to keep their payments as low as possible
- Option of returning the vehicle at the end of their lease term.
- You will most likely be paying off the vehicle longer.
- If you decide to apply on Canada Drives you can ask if there are leasing options available to you. Quite often they are available to customers with less than perfect credit.
Residual is the amount of the original value remaining at the end of the lease term. So for a $20,000 vehicle with a 40% residual the amount remaining would be $8,000.00