Cash, loan or lease: how do you decide?

Compare the total cost, not just the instalment, and read the disclosure before you sign. If religious guidance matters to you, know from the start that conventional loans charge interest.

1. Know where a loan can come from: the dealership (which usually arranges it with a lender) or directly from your bank or a credit union. The two routes can differ in terms, so compare them.
2. Get quotes from more than one dealer and lender, and compare the interest rate, payment schedule, fees and total amount financed. Do not just take the first offer.
3. Understand leasing: it is like a long rental, usually 3 to 5 years, and you may pay extra for excessive wear and tear. That means the car is not necessarily yours at the end.
4. Ask for the disclosure statement before signing; it must explain the total cost of the loan or lease and your obligations. If the numbers are not clear to you, do not sign until you understand them.
5. Want to know the going rates? Look at the Bank of Canada’s monthly data. These are general averages, not a personal offer to you.
6. If you want to avoid interest, some people save up and pay cash, and some offers call themselves Islamic. Either way, read the actual contract rather than the label, and ask a religious adviser you trust.

Caution: Many scholars consider interest on conventional loans to be riba, and other views exist for specific situations; this is a summary, not a ruling.

Bottom line: Compare the total cost, not just the instalment, and read the disclosure before you sign. If religious guidance matters to you, know from the start that conventional loans charge interest.

Last reviewed: 29 September 2026