June 11, 2014 | In: Opinion

Why Car Companies Push for a Lease Contract Instead of Just Finance

If you’re shopping for a car, then I’m sure that the first thing you’ll notice is that car companies try their best to get you on a lease contract. You can clearly notice, from their conversation, that they would rather prefer if you lease the car rather than just finance it, and they don’t do that because they’re idiots. In fact, it’s the complete opposite.

I was talking to an extremely friendly Toyota salesman a couple of days ago here in downtown Montreal, and he demonstrated how a lease is even cheaper to buy the car than finance. This is because you don’t pay the interest on all the taxes with a lease, and, you usually have a much better interest rate with a lease than with a finance. So I asked him, “what’s the catch?”

He immediately responded, it’s because when you’re leasing a car, we will have the chance to see you in a few years when you are returning the car, and we can sell you something else. But, if you’re buying a car (especially a Toyota), then we will not see you for a long, long time, and because we won’t have the chance to see you, then maybe you will be tempted to buy from a different car maker.

That’s their logic. They’re willing to sacrifice short term profitability for a long term business partnership. That’s not a bad logic, at least from my perspective.

So, the next time you have a choice between a lease or a finance, then pick the lease, it’ll be cheaper for you (a few hundred dollars over a 5 year term), it’ll be more convenient, and you will only be committed when you decide to buy the car at the end of your lease.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

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