About six months ago I wrote an article about acquiring a vehicle without Winter Tires during winter. Yes, you can drive your new car out your dealership with summer tires during a snowstorm, although I would never recommend so, although it is entirely legal. Now, is it really a good idea (financially) to do so or to buy the tires at the dealership?
My answer is yes; you need winter tires, you should buy these either from the dealership or anywhere else where you get a good deal. The real fact is "how you buy these":
If Your Preference is "Peace of Mind" over Costs...
Some manufacturers offer Tire Protection, Tire Appearance and Tire Warranty programs that work pretty well if you are more interested in coverages and "Peace of Mind" programs. BMW, Audi, Mercedes-Benz, Honda and multiple other offers so. But again, it is if you don't look at it from a "cost" point of view.
All these are added to your deal, as it is part of the requirements for the programs and of course, result in a tribute to the loan interest rates. Your contract will be heavier(more expensive) but, as you don't mind, just go ahead with it.
The Thing about the Interest Rate
As I mentioned in the previous section, adding the tires to the contract has a difference with having these "outside" of the lease contract: the interest rate.
Well, the real difference, if you finance(or not) your winter tires with the dealership, is that the interest rate will make these just a little bit more expensive and also make your monthly payments higher. I repeat: if you finance the tires. Just see the following example (all these numbers are from a real vehicle Build & Price calculator):
You are leasing a brand new car for 39 months. With a 1,49% interest rate, the base monthly payment for a three years (+3 months) lease is 358.83 + tax.
Now, if you add a set of winter tires to the deal (estimated at 1,099CAD excluding installation), the monthly payment would rise to 387.68 + tax:
- Tires Price if Financed = (387.68 - 358.83) x 39 months
- Tires Price if Financed = 28.85 x 39 months
- Tires Price if Financed = 1,125.15 CAD
The difference between the two variants:
- The Difference = Financed - Downpayment
- The Difference = 1,125.15 - 1,099
- The Difference = 26.15CAD
It is almost irrelevant. I totally agree with that, but the real impact relies on the contract itself and the downpayment. So, don't make it around the interest rate. Focus on the actual difference between how light/heavy it makes your contract.
Good for Lease Takeovers
If somehow in the future you are considering to transfer your contract, based on the previous example, what do you think would sound more attractive to a possible buyer?
- A lease takeover with winter tires and a 358.83 monthly payment.
- or
- A lease takeover with winter tires and a 387.68 monthly payment.
For sure the first one would have the catch for the eyes. In the end, we are talking about the same thing, but with separate facts. On one case, you didn't have to do any downpayment, on the other one, you had to pay the tire up front.
On the first contract, the tires would sound more like an actual incentive, while on the second one, these would seem more like "OK, but for that price, you would have to include at least the tires." Both would be adding significant value to your lease contract, but one would be more attractive regarding the regularity of the payments than the other one.
Finance These Outside of Your Lease Contract
This is a very good option. Although it may sound good to have everything in one single package, having your tires financed outside of the current lease contract is also possible. In the end, your tires are an additional accessory to your vehicle. You can acquire these later at your dealership or even at a different place.
Canadian Tire offers are very popular if you sign in to the Canadian Tire Master card and you can finance the tires at 0% for up to 24 months. There are multiple alternatives, so feel free to explore these with time.
There are alternatives, but always consider paying these upfront or financing these outside of your lease contract.
