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

In Ontario, the choice between leasing and financing a car loan fundamentally impacts your monthly budget, long-term ownership, and flexibility. Leasing typically presents lower monthly payments because you're only covering the vehicle's depreciation over a set term, plus interest and HST on those payments, making it appealing for those prioritizing immediate cash flow. However, this option comes with strict annual mileage limits and potential charges for excess wear and tear upon return, meaning you don't build equity and must either return the vehicle or purchase it at its predetermined residual value.

Financing, on the other hand, involves taking a loan to own the vehicle outright, leading to generally higher monthly payments as you're repaying the full purchase price, including the HST which is typically financed upfront. The significant advantage here is building equity in the vehicle over time, enjoying unlimited mileage, and freedom from end-of-lease penalties. For consumers looking towards 2025, while higher interest rates could mean a greater overall cost of borrowing for financing, it offers the security of full ownership, the ability to customize without concern for resale value to a lessor, and the flexibility to sell or trade at any point without lease-end obligations. Ultimately, your decision should weigh the desire for lower short-term payments and frequent vehicle upgrades against long-term ownership, equity building, and unrestricted use.