Should You Lease Or Buy An Electric Vehicle in Canada?

Should You Lease Or Buy An Electric Vehicle in Canada?

With soaring gas prices and a growing focus on environmental responsibility, Canadians are giving electric vehicles significant consideration. As you are thinking about joining the eco-conscious EV movement, a crucial decision may arise: should you lease or buy an electric vehicle in Canada? While every alternative has pros and cons of its own, the best decision might depend on your driving style and lifestyle.

In this article, we’ll discuss the main arguments for buying or leasing an electric vehicle in Canada as well as key factors to take into account and to assist you in examining the benefits and drawbacks of leasing versus buying an electric vehicle.

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Should You Lease Or Buy An Electric Vehicle in Canada

Should You Lease Or Buy An Electric Vehicle in Canada?

Leasing An Electric Vehicle in Canada

For drivers who are interested in driving an electric vehicle but aren’t sure they want to commit fully, leasing an EV provides an attractive entry point. Here’s a breakdown of the key benefits and drawbacks to consider:

Pro of Leasing

Electric vehicles still have a high rate of depreciation in the market today. For example, the price of the BMW i3 and Nissan Leaf has dropped significantly from their initial MSRP. When new, these two cars were among the first EVs available to the public at large at a reasonable price. The advantage of leasing comes from this. The technology for all-electric vehicles has advanced in the last several years as new generations of EVs are introduced. Better performance and range are available in newer models at the same price. As a result, older electric vehicle models equipped with outdated technologies quickly lose value. By leasing, you may drive a new electric vehicle every few years and stay up to date with technology.

Leasing typically translates to lower monthly payments compared to financing a purchase. This is because your payments are based on the vehicle’s depreciation during the lease term, not its entire value. When leasing an electric vehicle, a certain residual value is required. The residual value is the automaker’s estimate of what the car will be worth when the lease expires. The manufacturer will lose money if the EV’s actual resale value is lower than anticipated when the lease expires. This is a scenario that is quite realistic for an electric vehicle during its model cycle; therefore, you will have equity left over from your previous lease when you opt to lease a new vehicle, which you may use to lower the cost of the new lease.

Additionally, you can simply swap out or get rid of your electric vehicle when leasing. For example, you might be able to trade in your old EV for a new lease on a brand-new vehicle that has even greater performance, technology, and range. Before making a purchase, you can determine if electric driving works with your driving style and routine. The dealer typically offers you a buyout price at a pre-determined residual price if you decide at the end of your lease that you would like to keep your electric vehicle. Usually, at the end of your lease, that is less than the actual depreciated value of your electric vehicle.

Cons of Leasing

When you are leasing an electric vehicle, you usually have to sign a contract that is locked into a lease. This implies that to get rid of the electric vehicle, you will either need to pay the remaining balance on the lease plus an additional fee, or you will not be allowed to choose to opt out of the ownership contract.  In most cases, you may be limited to certain conditions, such as the maximum mileage on the vehicle or modification limitations in the lease details. Leasing agreements also often restrict vehicle modifications. Also, you might not be able to personalize your EV with accessories or cosmetic changes.

Unlike buying, leasing doesn’t build equity in the vehicle. Once the lease ends, you’ll have nothing to show for your payments. None of the money you invested may be recovered or traded in. Because there is typically an interest rate on the lease agreement, which means you have to pay more than your part of the vehicle’s cost, leasing an electric car increases your financial burden. Leasing also means that over a longer period, you might end up paying more for your leases than buying a car outright and selling it after a couple of years of use.

Lastly, when leasing, you must make sure the leasing option is available at the dealership. Some EV dealers do not offer any kind of leasing on electric vehicles because of the potential risks related to the advancement of technology in electric vehicles. This is the reason why some dealerships only allow customers to finance or buy electric vehicles.

Buying An Electric Vehicle in Canada

For drivers who crave complete control and long-term ownership, buying an electric vehicle presents a compelling alternative.  Here’s a closer look at the advantages and disadvantages to consider:

Pros of Buying

The primary benefit of buying an electric vehicle is that you may qualify for financial aid from provincial or federal governments to lower the initial cost of ownership. While leasing an EV may not make you eligible, the majority of Canadian provinces offer incentives for buying an electric vehicle. 

You have complete control over your EV when you are the owner. It’s yours to customize, take as much use of as you like, and maybe trade it in for your next vehicle. Purchases of EVs remove mileage restrictions, unlike leases. You don’t have to be concerned about going above any limits when driving.

In addition, buying an electric car does not obligate you to maintain it or need you to pay a fee if you want to sell it or change ownership. When you get an electric vehicle, you can sell it at any time if you decide it’s not the perfect car for you or that you don’t like it. This implies that you can always trade it in or sell it to get a newer or other model of electric vehicle. It is entirely up to you how much freedom and control you want to have overselling, trading in, modifying, or doing whatever else you want with your electric car. To put it briefly, you are free to use an EV without being constrained by a dealer or other usage restrictions.

Cons of Buying

Generally speaking, if you choose to buy an outright, you are taking on the main risk of your vehicle depreciating and losing a great deal of its resale value in the first few years of ownership. That may cost more than simply leasing an electric vehicle because of the possible maintenance and repair costs that need to be paid at your own expense. 

Compared to their gasoline-powered equivalents, electric vehicles are frequently associated with a higher initial cost. Consequently, buying an electric car requires a larger down payment since you typically need to have the whole sum available or finance the EV with a bank or dealership loan. It can wind up costing more than leasing an EV over the same three-year term if you have to pay interest on your monthly loan installments.

As EV technology evolves, you may miss out on the latest features unless you’re willing to sell your car and purchase a newer model. This can be a financially demanding cycle. Your car’s depreciation may potentially increase as a result of the rapid improvements in electric vehicle technology.

Ultimately, the decision to lease or buy an electric vehicle boils down to your individual needs and priorities. Here are some key considerations to guide you:

Driving Habits: If you drive a lot of kilometers, you might find that buying is a more economical choice than staying on a lease.

Financial Situation: Leasing can be a better option if a reduced monthly payment is important. But buying could be a better option if long-term ownership and possible trade-in value are important to you.

Technological Affinity: Are you always craving the newest and coolest features? Regular updates are possible with leasing. But if security and economy are your top priorities, buying might be a better option.

In summary, there is no definitive answer to whether you should lease or buy an electric vehicle. It is likely to be determined on a case-by-case basis based on your needs, whether you plan to use the car for long-term travel or just daily commuting, how long you need it for, what kind of payment works best for it, and how long you want to keep it. You have to use your judgment while selecting whether to lease or buy an electric vehicle. 

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As always, Carnex can provide you with detailed information about buying and selling used electric vehicles in Ontario.

Carnex is the top online EV expert in Canada for buying and selling used electric vehicles in Ontario.

Looking to sell your used EV and want more cash? Get an instant quote at Carnex!

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