Shopping advice
Long-term car leasing involves a lessee paying to use the car for the duration of the leasing contract. The car remains the lessor's property unless the lessee decides to avail himself of the purchase option when the lease ends. Signing a long-term leasing contract constitutes a debt for the consumer, just as if he had bought the car on credit.
Budget, brand and model
- Before choosing the car you lease, determine your budget, requirements and ability to pay.
- Keeping a specific model in mind, check advertising for new and used cars and go to several dealers.
- Before evaluating leasing terms and conditions, shop for the car based on its starting price. Some lessors offer better leasing terms than others. Leasing a car whose retail value is $30 000 generally costs more than another car of equivalent quality, whose retail value is $27 000.
- Remember that the terms offered (financing rate and value of purchase option) also affect the car's initial cost and ongoing expenses.
Comparing leasing offers
It is generally preferable to compare offers with the same elements:
- equivalent, and same-price vehicles;
- same down payment and lease duration;
- amounts of regular instalments (payment);
- value of purchase option;
- security deposit.
Calculating proposal costs
Cost calculations are based on various elements.
- First, you must consider:
- all of the amounts payable before the leasing period (except the security deposit, which the lessor refunds the lessee when the lease ends): down payment, one or more prepaid instalments (the merchant may not ask for more than two);
- the total amount of regular instalments payable under the lease;
- sales taxes applicable to each step;
- cost of purchase option when lease ends.
- Then, you must check whether the contract includes a mileage limit. This is generally the case. Find out surplus mileage charges if you expect to exceed the authorized limit.
- Remember to check insurance premiums.
- Finally, to find out whether the dealer or leasing company (to whom the dealer usually cedes the lease) you have chosen have been subject to consumer complaints, get merchant-related information.