Ask the Money Lady,

I want to buy a new car and was wondering if you had any advice on whether to finance or lease.

Doug XXXX (New Car Buyer)

Dear New Car Buyer!

Buying a new car in January or February is a great idea since these are historically the slowest months for car sales and dealerships are more willing to be flexible on pricing to move product.  According to the Canadian Car Dealers Association about 60% of buyers lease their vehicles leaving the other 40% of buyers either financing or paying cash.  Leasing or financing – what is better? On my website I have a detailed monetary comparison of the two, but my recommendation would be to finance your purchase if you plan to keep your vehicle long term.  Here are some tips to keep in mind.

  1. Finance your purchase through the car dealer not your local bank. Dealers have much better financing deals.  Getting a car loan from your bank will often cost you more since the rate will be much higher unless you can negotiate a low rate line of credit.
  2. The general rule-of-thumb for all Canadian car dealers is a markup on new vehicles of about 7-7.5%. You can usually get 3-3.5% off the list price when you are negotiating and if you have a trade in – make sure you keep this separate and get at least 3% off + the trade in value.
  3. The best time to haggle with a car dealer is at the end of the month when they are wanting to get their sales in to meet quotas. Buying a car at the beginning of the month could force you to pay an extra .5%  – so think like a car salesman, get a little savvy, buy at month end and push for your price.

If you are leasing, keep these tips in mind when you are negotiating with your dealer.

  1. Same mark-up applies for leasing new versus buying so try to get the price down by 3-4% off the “Sticker” price even if you plan to lease. It will make a difference in your monthly payment.
  2. If this is your second lease from the same dealer you have “Loyalty Power”. You should be getting 1% off the current financing rate for being a repeat customer (this is standard in the leasing business.  Make sure you get it!)
  3. The fees to be paid on a returning lease should be paid by the dealer if you are leasing again. Don’t get nickeled-and-dimed here on the minor repairs to the car or the fact that your tire tread might be lower than their 3 mm minimum.  Again – return it and haggle at the end of the month to get a better packaged deal – they will absorb these costs to get another lease on their books.
  4. On a returning lease, one thing they may not budge on is the millage. If you are over your original agreed package, they could charge you approximately $0.30 for every KM over.  If this is your first lease, make sure you get enough allowable millage in your package so that you are not over when you return the vehicle.

Good Luck and Best Wishes,
Money Lady

Written by Christine Ibbotson, Author of “How to Retire Debt Free and Wealthy”  Follow on Facebook & Instagram

Written by Christine Ibbotson, Author of “How to Retire Debt Free and Wealthy”  Follow on Facebook & Instagram

If you have a money question, please email: