Should You Lease or Buy Your Next Vehicle?
When you’re ready for a new ride, one of the first big decisions you’ll face is whether to lease or buy. Both options come with distinct advantages, depending on your lifestyle, financial goals, and how long you plan to keep the vehicle. Let’s explore the key differences and break down the numbers to help you decide.
Why Leasing Might Be Right for You
- Lower Monthly Payments: Leasing generally costs less per month than financing because you’re only paying for the vehicle’s depreciation during the lease term—not the full purchase price.
- Drive Newer Vehicles More Often: Enjoy the latest Chrysler, Dodge, Jeep, or Ram models every 2–4 years, keeping up with the latest technology, safety features, and fuel efficiency.
- Warranty Coverage: Most lease terms fall within the manufacturer’s warranty period, so major repairs are typically covered.
- Lower Sales Tax: In most provinces, you only pay tax on your monthly lease payments—not the full vehicle price.
- Easy Vehicle Turnover: At the end of your lease, simply return the vehicle—no need to worry about resale or market depreciation.
Note: There are two types of leases:
Closed-End Lease: Return the vehicle and walk away, as long as you’re within mileage and condition limits.
Open-End Lease (e.g., Davis Capital): You’re responsible for the residual value. This is often set lower than the actual vehicle value, which may work in your favour—but it also carries risk.
Business Tax Write-Offs: If you’re leasing for business use, you may be able to write off the entire lease payment as a tax-deductible expense. This is often more beneficial than buying, where only the interest portion of the loan is deductible. It provides more immediate tax relief and lowers your long-term cost of driving.
Real-World Example: 2025 Jeep Grand Cherokee Altitude
MSRP: $65,562
Lease Offer
- Term: 24 months
- Monthly Payment: $774
- Down Payment: $3,000
- Residual Value: $45,866
Finance Offer
- Term: 60 months (for comparison, we’ll look at just the first 24 months)
- Monthly Payment: $1,251
- Down Payment: $5,000
- Estimated Market Value after 24 months: $45,866
Side-by-Side Cost Comparison (Over First 24 Months)
| Category | Leasing | Buying |
|---|---|---|
| Down Payment | $3,000 | $5,000 |
| Monthly Payments | $774 × 24 = $18,576 | $1,251 × 24 = $30,024 |
| Total Paid in 2 Years | $21,576 | $35,024 |
| Vehicle Value After 2 Yrs (Assuming Open-End) | N/A – return the car | Worth approx. $45,866 |
| Equity/Ownership | None | ~$10,842 equity (if sold) |
| Resale Option | None – hand in the keys | Sell or trade in |
| Maintenance & Repairs | Likely under warranty | Likely under warranty |
Lease Types: Quick Comparison
| Feature | Closed-End Lease | Open-End Lease |
|---|---|---|
| End-of-Term Obligation | Return vehicle, walk away | Responsible for residual value |
| Mileage Limit | Yes (penalties for excess km) | No set limit |
| Wear & Tear | Must be within normal limits | More flexible |
| Who Bears Depreciation Risk | Leasing company | You (the lessee) |
| Best For | Personal use, predictable driving | Business use, high-mileage driving |
What the Numbers Show
Leasing offers a lower upfront cost and smaller monthly payments. After two years, you’ll have spent roughly $18,600 and returned the car.
Buying costs more upfront, but after two years and $30,200 spent, you’ll still own a vehicle worth about $38,500—leaving you with approximately $8,300 in equity if you sell or trade it in.
Which Option is Right for You?
| If you want… | Go with… |
|---|---|
| Lower monthly payments and upfront cost | Leasing |
| Driving a new vehicle every few years | Leasing |
| Building long-term equity | Buying |
| Keeping a vehicle for more than 5 years | Buying |
| No worries about resale value or depreciation | Leasing |
| Unlimited mileage and full customization | Buying |
Find the Right Option at Bridge City Chrysler
Whether you’re leaning toward leasing or financing, our Finance Team is here to help you make the most informed and cost-effective decision. We’ll walk you through your options and match you with the best offer for your needs.