Difference between revisions of "Leasing a Car"

A lease is an agreement to rent, or use someone else’s property, in this case, a car. A lease is usually long term. It can last from several months to several years. At the start of a lease, you make a first, or initial, payment on the lease. You may also have to pay a security deposit. After that, you make monthly lease payments.

*a '''straight lease'''—with this, you return the car when the lease ends and owe nothing more. This is only used rarely now.  

A lease agreement is a legally binding contract, so make sure you understand it before you sign it. Section 30 of the BC ''Motor Dealer Act'' Regulation (available at [http://www.bclaws.ca www.bclaws.ca]) requires a lease agreement to have the following information:

Section 101 of the ''Business Practices and Consumer Protection Act'' (available at [http://www.bclaws.ca www.bclaws.ca]) requires the dealer to give you a Lease Disclosure Statement before you sign the lease. Read it carefully. It has all the key terms and details of the lease.

You don't normally get a tax deduction for a consumer lease, only for a business lease. Check with Canada Revenue Agency for details ([http://www.cra-arc.gc.ca www.cra-arc.gc.ca]).

For a business lease, you don't get the protection of 3 laws: the ''Business Practices and Consumer Protection Act'', the ''Personal Property Security Act'' or the ''Motor Dealer Act''. So if there's a mechanical problem with the car, you still have to continue paying the lease. The Sale of Goods Act still give you some protection that the car is suitable for its purpose—but only if you lease the car mainly for personal, family, or household purposes. If you want to lease for business purposes, you should first get legal and accounting advice—before you lease. All these laws are available at [http://www.bclaws.ca www.bclaws.ca].

You may still owe money when the lease ends. The car goes back to the dealer, or you may have an option to buy it for a certain price. Whether you owe money depends on the type of lease you signed (types of leases are explained earlier in this script).  

With a straight lease, you return the car and owe nothing more. With a closed lease with an option to purchase, you pay just the agreed-on amount if you decide to buy the car. But with an open lease with an option to purchase, you may have to pay an extra amount. You may also have to pay extra if you drove more than the lease allowed or if the car has more than normal wear. And dealers may want to charge other fees at the buy-out time. So before you sign a lease, ask about any fees that the dealer will charge at the time of buy-out. Discuss them with the dealer and get them in writing—before you sign the lease agreement.

If you buy a vehicle at the end of the lease, it’s a new transaction. So motor dealers and salespeople must make all their required declarations, especially the declaration that the vehicle meets the safety requirements of the ''Motor Vehicle Act'' when they sell it. The declarations are listed in the Vehicle Sales Authority of BC glossary at [http://www.mvsabc.com/glossary-of-terms www.mvsabc.com/glossary-of-terms].

For more information on leasing a car, check the article titled "[http://www.mvsabc.com/consumers/is-leasing-a-vehicle-for-me Is Leasing a Vehicle for me?]" on the website of the Vehicle Sales Authority of BC. It has information on consumer help and complaints. This website also describes the [http://www.mvsabc.com/consumers/compensation-fund Motor Dealer Customer Compensation Fund] (which may cover financial losses from leasing a vehicle if the dealer is no longer in business).  

[updated July 2014]