Car Financing vs Leasing: Which is Right for Ontario Drivers?
My Next Ride Ontario
January 20, 2026
Financing vs Leasing: Making the Right Choice
When getting a new vehicle in Ontario, you have two main options: financing (buying) or leasing. Each has distinct advantages depending on your situation.
What's the Difference?
Financing (Buying)
- You own the vehicle once paid off
- Monthly payments go toward ownership
- No mileage restrictions
- You can modify the vehicle
- Higher monthly payments, but you keep the car
Leasing
- You rent the vehicle for a set term
- Monthly payments are typically lower
- Mileage limits apply (usually 20,000 km/year)
- Must return in good condition
- No ownership at the end (unless you buy out)
When Financing Makes Sense
Choose financing if you:
- Drive a lot - No mileage penalties
- Keep vehicles long-term - Plan to drive it 7+ years
- Want to own - Building equity matters to you
- Modify vehicles - Want to customize your car
- Have variable income - Own it outright when paid off
When Leasing Makes Sense
Choose leasing if you:
- Want lower payments - Same car, less monthly
- Like new vehicles - New car every 3-4 years
- Drive under 20,000 km/year - Won't hit mileage limits
- Want warranty coverage - Always under manufacturer warranty
- Business use - Potential tax advantages
The Numbers: A Real Example
Let's compare a $35,000 vehicle:
| Factor | Financing (5 years) | Leasing (3 years) |
|---|---|---|
| Monthly payment | ~$650 | ~$450 |
| Total paid | $39,000 | $16,200 |
| At end | You own car worth ~$18,000 | Return car, nothing |
| Net cost | ~$21,000 | $16,200 + need new car |
Over 9 years, financing often costs less because you own the vehicle during years 6-9.
Credit Score Considerations
Your credit affects both options differently:
Financing with Bad Credit
- Higher interest rates (10-25%)
- May need larger down payment
- More lenders available for financing
Leasing with Bad Credit
- Often requires good credit (680+)
- Fewer options available
- May need a co-signer
If you have challenged credit, financing through a non-prime lender is usually your best path.
Ontario-Specific Considerations
- HST - 13% on purchase price (financing) vs monthly payments (leasing)
- Insurance - Leased vehicles often require more coverage
- Winter driving - Own your vehicle = winter tire flexibility
Our Recommendation
For most Ontario drivers, especially those rebuilding credit, financing is the better choice. You build equity, have no mileage restrictions, and own an asset when done.
Leasing can work if you have excellent credit, drive minimally, and value having a new vehicle every few years.
Need Help Deciding?
At My Next Ride Ontario, we help drivers across the GTA find the right vehicle and financing. Whether you're buying new or used, we work with 17 lenders to find options that fit your budget and situation.
Contact us to discuss your options - our service is free and there's no obligation.