CAR MATH for Canadians & Tradeoffs

<p>Calmmoneycoach.com</p><p>If you are buying a car in Canada this year, you are having an argument with yourself. Lease, finance, or buy used. I ran that argument 6,916 times, and the argument you are having is not the one that decides it.</p><p>Every one of the 133 vehicles in my calculator, all 13 provinces and territories, 4 hold lengths. What comes out of it is that how long you keep the car matters more than how you pay for it.</p><p>Keep a car 3 years and buying used wins 99.7 percent of the runs, and the cheapest path beats the next one by about 22 percent. Keep it 15 years and used wins 55 percent, buying new wins 32, leasing and then buying it out wins 12. Call it a tie when the best 2 paths land within 5 percent of each other, and at 3 years that happens in 4 percent of runs. At 15 years it is 75 percent. A new car&#39;s worst depreciation happens in year 1, and the longer you hold it, the more years that one bad year gets spread across.</p><p>What else is in here. Put $50,000 into a hybrid and 5 years later you have about $33,100 of it. Gas, $30,300. Battery electric, $22,300. Buying used won 100 percent of the electric runs at 3, 5 and 10 years, which is the same depreciation working for you instead of against you. Hybrids hold value so well that at a 15 year hold, buying new wins 54 percent of the time, the only powertrain where new takes the majority. Knock a full point off the new car finance rate and the winner changes in 5 percent of runs, and in none at all where the gap was already 10 percent or more. Leasing forever came last in 90 percent of runs and at a 10 year hold the median run cost $50,935 more than the cheapest path. On the business deduction, lease payments are capped at $1,100 a month before tax, but buying is deductible too, on a cost capped at $39,000 plus $350 a month of interest, so leasing is not a loophole. And the same Corolla Hybrid at 16,000 km a year over 10 years runs $64,184 in the Northwest Territories against $79,225 in Ontario.</p><p>Running costs are in every total, including maintenance priced apart for new and used, insurance, fuel or power, tires and registration.</p><p>I also tell you the 2 things the model cannot do, and the part where it argues with me. At my own usage, 10,000 km a year in Nova Scotia over 12 years, the gas Impreza and the Corolla Hybrid land $9 a year apart. I write about this for a living and the answer for my own household is a gas car.</p><p>Sources: Natural Resources Canada, iSeeCar