How Does Leasing a Car Work in Canada?
In the past, having access to a car felt like a luxury; nowadays, it feels like a necessity!
Whether you happen to need it for school, work or everyday life, having access to a car makes life more convenient in countless ways. That being said, buying a car can be an expensive, long-term commitment that some drivers don't feel comfortable undertaking. That's why more and more drivers in Canada are deciding to lease their vehicles instead.
If you're asking yourself, "how does leasing a car work for drivers in Canada?" you're not alone. Several drivers have questions about how the leasing process works.
That's why we've put this article together — today's post will go over the ins and outs of leasing a car in Canada. Continue reading to learn more.
What is a car lease and how is it different than buying a car?
In short, a car lease is an agreement between a driver and a car dealership. The driver makes regular monthly payments to the dealership in order to use the vehicle for a set period of time (this is a significant difference). A car lease is a lot like a long-term car rental agreement, but it’s not exactly the same.
Most car lease agreements last between two and four years; however, you can get out of a lease early if you can set up a car lease takeover with another driver.
After the lease period ends, the driver must return the vehicle to the dealership. At this point in the process, the driver has three options: purchase the car that they leased, lease a new model or walk away.
Leasing a vehicle is very different from buying a car. When you buy a car, you generally need to make a large initial payment and get approved for a loan. In contrast, these steps aren't required when you lease a vehicle.
On a similar note, when you buy a vehicle, your monthly payments go towards your loan, which puts you closer to completely owning the car. On the other hand, when you lease a vehicle, you still need to make monthly payments, but as mentioned earlier, these payments only allow you to use the car.
How does leasing a car work for drivers in Canada?
If you're asking yourself, "how does leasing a car work in Canada?", you'll be pleasantly surprised to learn that the process is quite simple. First, you need to do some research and narrow your potential options down to a few brands and models. Then, you can start to visit dealerships and chat with a salesperson about leasing a vehicle.
The salesperson will help you set up a design for your lease, pick out the perfect model and help you get the best deal on your lease by giving you access to generous discounts.
After you've filled out the necessary paperwork, contacted your car insurance company (or broker) and finalized the agreement, you can finally enjoy your new ride.
Just ensure that you make your car lease payments on time, keep the vehicle clean and stay within the kilometre limit. Doing these things will help you keep the car in good condition and help you save money by avoiding expensive fees. Now you know the answer to the question, “how do leases work in Canada?”.
What are the pros and cons of leasing a car in Canada?
There are several pros and cons that come with leasing a vehicle in Canada.
Drivers should be aware of the positive and negative factors of leasing before deciding whether they'd like to go through with an agreement or purchase a car instead.
What are the pros of leasing a vehicle in Canada?
Some of the positive aspects of leasing a car in Canada include:
- Monthly lease agreement payments tend to be more cost-effective than financing payments.
- You get a fresh, new model every two to four years (depending on the length of your agreement).
- Because you don’t own the vehicle, you don't have to worry about the vehicle losing value.
With this in mind, it's clear that some highly beneficial perks come with leasing a car in Canada.
What are the cons of leasing a vehicle in Canada?
Some of the negative aspects of leasing a car in Canada include:
- Finding a car lease takeover is possible if you don't like the vehicle, but it can be tricky.
- You cannot sell the car once you are done with it.
- You pay fees if you exceed the agreed kilometre limit (you can extend the limit for a small charge).
- The vehicle needs to be returned in pristine condition with no signs of physical damage (scratches, dents, dings, etc.).
Drivers should take note of these factors before making a final decision about leasing a car in Canada.
How does leasing work for used vehicles in Canada?
If you are looking to save some additional money, you may want to consider leasing a used car. Leasing a used model is less expensive than leasing a new car for a number of reasons. Firstly, used vehicles aren't as flashy, which is something car leasers tend to want. Additionally, used car leases are usually only available through drivers who want to end their lease early.
Leasing a used car may seem tempting, but it can be risky. Used cars are more prone to internal issues and wear-and-tear; if a problem occurs, you are financially responsible for making the repairs.
Do you need auto insurance to drive a leased car in Canada?
Yes, you need to have valid auto insurance in order to drive a leased (or owned) vehicle in Canada. If you're looking for the best auto insurance for your leased vehicle, you should team up with a reputable insurance brokerage like Surex.
Save up to 25% on auto insurance in Canada when you shop with Surex
Whether you're buying or leasing a car, you need to have auto insurance. Auto insurance helps financially protect you, your family members and other drivers after an accident takes place on or off of the road (depending on your level of coverage).
Teaming up with Surex makes shopping for car insurance quotes a quick and straightforward task; all you have to do is contact your personal insurance advisor online or over the phone. Wait ten short minutes and voila! You have a collection of quality auto insurance quotes from the top-rated car insurance companies in Canada.
Contact your Surex advisor today to learn how you can save up to 25% when you bundle multiple policies with one of our trusted insurance partners.