Difference between revisions of "Leasing a Car"

If you fail to make a payment under a lease, this is called a '''default'''. If you default under the lease, the leasing company may be able to take the vehicle back ('''seize''' it) or sue you for all remaining lease payments. Depending on the lease agreement and the use you put the vehicle to, they may be able to do both.  

Key is whether the lease is viewed under the law as a “true lease” or a “secured lease”. Generally, a '''true lease''' is one where at the end of the lease, the cost to buy the vehicle is an amount close to the vehicle’s market value. A '''secured lease''', generally speaking, is one where at the end of the lease, the cost to buy the vehicle is very little. Put another way, under a secured lease, you will have paid almost the entire value of the vehicle by the end of the lease. (There are other factors that go in to determining whether a lease is a true lease or a secured lease. It is best to get legal advice on how your lease might be characterized.)

Under the [http://canlii.ca/t/8495 law in BC], two rules kick in to protect you if the lease is a secured lease and the vehicle is used primarily for “personal, family or household purposes”. If you default on the lease, the leasing company can seize the vehicle. Or they can sue you for the amount owing on the lease. But they can’t do both. This is called the “'''seize or sue rule'''”.   

 

====If the lease is a true lease or for business use====

If the lease is a true lease, things are different. They’re also different if the vehicle is used primarily for business purposes. In either case, if you default on the lease, a creditor may be able to sue you '''and''' seize the vehicle. For more on the law relating to secured debts, see our information on [[Buying Goods on Credit, Credit Cards and Credit Bureaus (Script 246)|buying on credit (no. 246)]].