| How the 'voodoo' of car leasing will make it appear the least expensive option OTTAWA — Canada's auto guru Dennis DesRosiers has a rapid response to the question of whether it's best to lease or finance a new car _ pay cash. Aceto says the CAA does not pick sides, but advises members to ``do the math'' and consider carefully their preferences. ``Residuals are extremely volatile and nearly impossible to predict. By DesRosiers' calculations, about 18 per cent of Canadians leased their vehicle last year, while the vast majority financed. That's why monthly payments are usually lower, but at the end of the lease, the consumer doesn't own the vehicle and will have paid more in interest than on a loan. ands down, no exceptions, but it doesn't look that way. ``The embedded interest in a lease is typically about $100 a month higher than the interest on a loan,'' DesRosiers says. First, if you are the sort of person who will be addicted to the new-car smell, lease if you can afford it, he says. ``It depends,'' he says, on what you expect out of your driving experience and whether you are more sensitive to the size of monthly payments or the end-of-use total cost of the purchase. Repeat the process. ``It's the voodoo of leasing,'' DesRosiers says. Take a brand new car, drive it for three years, then return it and get another new car. As well, there are additional costs that could accrue on a lease, and they can be substantial. ``For 15 to 20 per cent of clients, leasing is a viable option, but for the rest they would be better off financially with a loan,'' he says. ``The issue is not whether you would like a whole new vehicle every three years, it's whether you can afford a whole new vehicle every three years and most consumers can't. . ``So leasing is a consumer beware item,'' he says. ``Some people like the flexibility of a lease, they like to have a brand new car every two or three years, and they don't have to worry about maintenance because when the car is new, usually that's when repairs are the fewest,'' she says. But he realizes most Canadians can't just lay down tens of thousands of dollars at one go, or don't wish to, so when asked about the remaining options, his response is more nuanced. As well, DesRosiers says many consumers wind up paying hefty penalties if they put on more than 25,000 kilometres a year, not that unusual since the average driver in Toronto clocks in at over 30,000 annually. You may not own the car at the end of the lease term, but then you don't have the worries older cars can bring, including breaking down and repair costs. ''. How the 'voodoo' of car leasing will make it appear the least expensive option |
Friday 2 March 2012
How the 'voodoo' of car leasing will make it appear the least expensive option
