In AB, what should I know about leasing vs financing for car loans?

In Alberta, understanding the distinctions between leasing and financing is crucial for making an informed car loan decision. Leasing, essentially a long-term rental agreement, typically results in lower monthly payments because you are only paying for the vehicle's depreciation during the lease term, plus interest and taxes. This model allows you to drive a newer vehicle more frequently, often covered by the manufacturer's warranty, and can be appealing for those who prefer predictable costs and want to avoid long-term maintenance responsibilities. However, leasing comes with strict mileage limits, potential charges for excess wear and tear, and no equity build-up, meaning you don't own the vehicle at the end of the term unless you opt for a buyout at its residual value. For 2025, while prevailing interest rates will influence lease factors, manufacturer incentives can still make leasing an attractive option for specific models, offering a lower entry point to new vehicle ownership. This matters for consumers who prioritize lower upfront costs and enjoy upgrading their vehicle every few years, provided their driving habits are predictable.

Financing, conversely, involves taking out a loan to purchase the vehicle outright, allowing you to build equity with each payment. While monthly payments are generally higher than leasing, you gain full ownership of the vehicle once the loan is repaid, free from mileage restrictions or wear and tear penalties. This provides complete freedom to customize the vehicle, drive unlimited distances, and retain the asset for as long as you wish, with the potential to sell it later and recoup some of your investment. In Alberta, you will pay GST on the full purchase price of the vehicle,