Blog > Leasing a Car in Canada. The Good, the Bad and the Reality.

Leasing a Car in Canada. The Good, the Bad and the Reality.

You have a few options to consider when it’s time for a new vehicle. If you have the cash, you can buy the vehicle outright. If buying is not realistic for you, you can finance or take out a lease. While buying and financing seem pretty straightforward, leasing can be confusing, especially if you haven’t been through the process before.

How Leasing Works

Like financing, leasing requires an upfront payment followed by a monthly payment schedule. The big difference between financing and leasing is that when the lease contract ends, you don’t own the vehicle as you would at the end of a loan. When your lease contract is up, you have a few different options.

  • Return the vehicle to the dealership
  • Buy out the vehicle for the remaining value
  • Take out a lease on a new vehicle

Leasing is kind of like renting. You only pay for the amount of the vehicle value that you use. Because you are only paying for the amount of the vehicle that you are using, the monthly payments are a lot lower than if you financed the whole car.

Every lease contract comes with restrictions and limitations. Based on these, the leasing company you work with will have a general idea of how much of the value of the vehicle you will use. These constraints usually include limits on the number of kilometres you can use per year and a process for all mechanical and visual repairs.

Leasing Pros and Cons

Sometimes leasing can seem attractive due to the lower monthly payments, but leasing isn’t always the right call for everyone. As with any big purchase, it’s important to consider the pros and cons, especially when looking at a finance vs lease option.

Pros of Leasing

  • Frequent New Cars – Do you love that new car smell? Depending on your lease terms and how consistently you lease, you could get to drive a new car every 2-4 years. This is especially great for manufacturer’s warranties and having the latest design and tech in your vehicle.
  • Low Monthly Payments – Since you are only paying for the value of the vehicle you are using, the monthly payments are far lower than if you were financing or buying it outright.
  • Pay less tax! When leasing, you never pay tax on the whole vehicle like you would if you were financing or paying cash. Tax is added to each payment, leaving the residual balance at the end of the lease not taxed.
  • Maintenance Perks – Generally speaking, automakers want to keep their lease vehicles in excellent condition because lease returns make up a significant portion of their certified pre-owned inventory. Sometimes, a dealership will offer free maintenance to ensure that these vehicles stay in the best condition possible.
  • Long-Term Test Drive – If you plan on buying out your vehicle at the end of the lease contract, leasing can be like a long-term test drive. This ensures that you love the car before keeping it for the long haul. If you don’t like the vehicle, you can return it at the end of the lease term, pay only the disposition fee, and get a different car for the next lease.

Cons of Leasing

  • Ownership (or lack thereof)Unless you choose to buy the vehicle at the end of your lease term, you don’t own it. Like renting a house or apartment, you are only paying for the value and amount of time you use it. At the end of your lease contract, you have nothing to show for all the monthly payments you’ve made.
  • New Car Depreciation – Leasing is only for new cars, so you are stuck with the huge value depreciation that new cars go through in their first couple of years. Depreciation in new vehicles can be as much as 20% of its new value and another 15-25% yearly in the first five years on the road. Leasing means you are basically paying off the depreciation for the leasing company.
  • No Modifications – Almost all leasing contracts require that you return the vehicle in factory condition. This means no modifications. If you like to customize your car (wheels, tires, tint, upgraded audio systems), you will have to remove any mods or refrain from adding them in the first place. You might be charged additional fees if you return a vehicle with any modifications.
  • Lease-Termination Fee – If you don’t like your leased vehicle, or some unforeseen circumstance comes up where you need to move, sell or trade it, you could be stuck with a hefty lease-termination fee. This would be on top of the remaining lease balance and can make it nearly impossible to leave the lease before the term ends.
  • Lease Disposition Fee – Some companies have a lease disposition fee when you turn in your car at the end of your lease term. It can cost hundreds of dollars, depending on the company. Some companies will waive this fee if you buy out the lease, trade it in for a new car or lease another vehicle when turning in your current lease.
  • Wear and Tear fees – Most lease contracts specify that the vehicle must be returned in good condition. If there is any wear and tear outside the agreement, you may be charged a fee to cover the repairs.
  • Kilometre Limitations – A general 20,000 to 24,000 km per year is a standard limitation included in lease contracts. If you drive more than that per year or accumulate more than what you are allowed in the contract, you can expect to pay a 7-15% fee at the end of your lease agreement.
  • Maintenance Requirements – As mentioned, some automakers will include free maintenance. Unfortunately, this free maintenance may also come with a required schedule and where to perform it. This could be inconvenient if you don’t live close to the dealership or if it’s challenging to get an appointment. If free maintenance isn’t included in your contract, you will probably be required to have it maintained at a dealership which is generally more expensive than if you did it at a third-party repair shop. 

Fortunately, there are other options…

Although the monthly savings of leasing can be attractive compared to the cost of buying or financing a new vehicle, leasing restrictions can be frustrating. Why not skip all that stress and buy a quality pre-owned electric vehicle from Besides being environmentally friendly, electric vehicles are more reliable and easier to maintain. also provides a 150-point inspection, 10-day money-back guarantee and 3-month quality guarantee. And drum roll, please…we’ll deliver it right to your door. Check out our great selection of pre-owned electric vehicles and choose the right car for you at