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

In Newfoundland and Labrador, understanding the distinctions between leasing and financing is crucial for a car loan, especially with evolving market conditions into 2025. Leasing typically offers lower monthly payments as you're only paying for the vehicle's depreciation during the lease term, not its full purchase price, making it attractive for those who prefer frequent vehicle upgrades and lower upfront costs. However, leases come with strict mileage limits and potential wear-and-tear charges at the end of the term, which can lead to unexpected expenses, and HST in NL is applied to each monthly lease payment.

Conversely, financing means you are purchasing the vehicle outright over a set period, building equity with each payment towards eventual ownership. While monthly payments are generally higher, covering the entire vehicle cost plus interest, you gain complete freedom from mileage restrictions and wear-and-tear penalties, allowing for customization and the ability to sell or trade the vehicle at any point without lease-end obligations. For financed purchases, the full HST on the purchase price is typically paid upfront or rolled into the loan.

The choice ultimately hinges on your personal driving habits, long-term ownership goals, and financial flexibility. If you drive extensively or prefer long-term ownership and avoiding restrictions, financing is often more suitable. If you prioritize lower monthly costs and enjoy frequently upgrading to new models, leasing can be appealing, provided you adhere to the stipulated mileage and condition limits. Always factor in the total cost over the term, including interest rates which remain a significant consideration in the 2025 Canadian market.