Are monthly payments necessary?
Paying cash for a vehicle may not be the most economical choice when it comes to your vehicle purchase. Using personal lines of credit or cashing in investments may involve greater interest payments in the long run or fees and penalties for early withdrawal. We partner with all major financial institutions to provide the lowest possible interest rate, plus flexible terms and repayment options saving you time and money. Additional details about the choice between paying cash and financing are included in our article about it here.
How are monthly lease payments determined?
When determining a monthly payment, the main factors considered are the amount of depreciation the vehicle will experience (how much it's worth at the start, minus what it's worth at the end) and the cost of borrowing the money (the interest due to the lender).
Here are the 3 main components of a lease:
First, the adjusted capitalized cost is determined. This figure represents the real purchase price after elements such as the down payment, incentive discount and trade-in credit are deducted from capitalized (actual) cost, while all other amounts such as Freight and Pre-Delivery, accessories, etc. are added.
Second, the residual value, or estimated market value of the end of the lease, is determined by the manufacturer and then subtracted from the adjusted capitalized cost to yield a depreciation figure. Factors that impact the residual value are term of the lease, expected mileage, and in some cases accessories added (some dealer installed accessories can positively impact the residual by adding to the vehicle's future market value)
Finally, a lessor assesses the money factor or effective interest rate to determine the cost of borrowing. By calculating all of these figures and adjusting the final cost over the term of the agreement, the final monthly lease payment can then be determined.
How are loan rates determined?
The size of the monthly (or bi-weekly) payment depends on the amount borrowed, the length of the loan, the interest rate and other factors such as your credit score. Our financial services are secure, confidential, competitive, and loan balances can be paid in part or in full without penalty.
General Loan Specifications
A down payment can be applied towards your loan amount, but isn't necessarily required. Trade-ins can also serve as a down payment, and if there is a balance owing on the trade, this amount can often be combined with the new loan. Loan terms range from 24 months to 96 months and are available as monthly or bi-weekly repayment. Rates and terms are subject to change at any time and our friendly staff are always ready to provide you with all of the up to date information regarding current offers. All terms and payments are On Approved Credit.
Are loans available for used vehicles?
Yes, they are. This can be a very convenient method of repayment as our financial institutions endeavor to provide the most competitive terms and rates possible. The interest rate and term depends, in part, on the model year of the vehicle being purchased, the amount borrowed, as well as on your credit rating. Used car loans are similar to new car loans in that they have the same flexibility of early repayment without fees or penalties. Our Subaru Certified Pre-Owned program offers a lowered interest rate option for those that qualify.
Can vehicle customization, taxes and government levies be financed?
Yes, dealer installed accessories, extended service plans as well as other forms of insurance and vehicle protection can be financed. All taxes, environmental fees, and any other associated costs can also be financed with your loan. This is a great way to budget for one pre-determined amount.
Which option makes the most sense?
There is no 'right' answer to this question as it depends on a variety of things, largely on how you plan to use the vehicle. If you tend to upgrade your vehicle on a three or four year cycle, leasing is a great option. However, if your plan is long term ownership, financing is the way to go. Additional details about the choice between leasing and financing are in our article about it here.