Mmmmm.... an excellent question many people do us every month. As I use to say on my articles, this kind of issues have a particular response: it depends. On the following post, I will try to go as thick as possible into the variants related to this and also include the 24 months lease, for reaching a better response. So, if you lease a car, which is the best term for it?
24 & 36 Months are Better for Luxury Vehicles
We all know that Luxury vehicles tend to lose value very fast. While these are initially more expensive, the depreciation rule of 100,000km/5 years to reach 40%-50% of the MSRP as the Residual Value is the same for either luxury or popular brands.
All cars depreciate out there rolling, fighting the weather and wearing components. This is why the best option for Luxury vehicles will always be the less term possible.
24 & 36 Months are Better for Businesses
For the actual business nature, the availability of tax deductions on leased vehicles and the fact that you may want to reduce your liabilities to the closest term possible, the shorter the time for a Business Vehicle, the better.
Either if you are leasing a Pickup Truck of the ones available on the Canadian Market or just having a leased vehicle in your business as an asset, you will always find more suitable to have it for the shortest term possible.
Warranty Is a Key Factor
And this is just because no one wants to be repairing someone else's vehicle. If you lease a car for five years, and the final two years you will be rolling outside of the warranty period, then whatever mechanical problem, will be up to your pocket.
Most manufacturers offer a default three years limited warranty (excluding all wearable components) that takes care of the popularly known "Bumper to Bumper" repair costs.
60 Months is Better for Hyundai, KIA & Mitsubishi
These three manufacturers, Hyundai, KIA & Mitsubishi, offer a 5-year warranty on top of the one provided by default by the rest of the brands. While I won't discuss on this article the cause (and also remember that warranties can be extended), this is an added value that will help you get rid of your lease in case it is necessary.
The all-new Mitsubishi RVR comes with 5 years warranty by default.
36 & 60 Months are Better for Individuals
And mostly because of costs. The longer the contract, the cheaper the monthly payment is. Either if you are new to car leasing, you don't mind spending the next five years with the same vehicle, or you just don't expect to change your transportation needs over that time (always with the wildcard of doing a lease transfer), then this is the best option for you.
60 Months is Cheaper in 95% of Cases
And I mean 95% because as a matter of fact, it is always cheaper, but sometimes you can find better prices for 36months (and exceptionally on 24). Yes, that is true. Just to mention a couple of examples:
- In November 2016, the 2017 Hyundai Elantra price for 24 months was only 10 CAD/month lower than the 60 months contract. It was because of the interest of the company to push the model forward in the market.
- Something similar happened with the 2017 Sportage: the 36 months contract was cheaper than the 60 months one from December 2016 to May 2017.
Just Research Before Deciding
The key is to be up to date on the market. There are more than 300 different base models in Canada to choose from, more than 26 manufacturers and thousands of dealers across the country to be up to date with.
