Car Lease: 5 Things to Know Before Closing a Deal

Ready to close a deal? Well, this is something that is always worth to think more than once. No matter how many times you think about it, you will still find a new opportunity to improve it and get the most of your next car lease.

On a previous article, I talked about 7 Tips for Getting a Good Deal, but on this one, I will refer to the things that you need to do BEFORE applying any of those tips and even jumping into the dealer to negotiate the price of your new car lease:

The Car MSRP & Residual Value

Either if you are financing or leasing a vehicle, both the MSRP and Residual Value are essential when negotiating a new vehicle price. For both, you and the dealer, there is nothing more satisfactory, efficient, time-saving and that reaching a deal without unnecessary hours of haggling.

Know the numbers from the very beginning, and you will save tons of time of negotiation, investigation, and study.

Quote Your Full-Cover Insurance Costs

Don't be caught with the old math that "I want to pay 400CAD/month for my car" and you end up paying 400 + 120 on insurance. Before closing a deal, it is crucial that you are aware of how much will cost you to ensure a specific model.

Insurance costs are generally between 80 - 200 CAD/month, depending on the vehicle, the model, the trim and what does the cover actually includes. Yes, leased cars must have Full Cover Insurance, also known as "Collision and upset Insurance Coverage" (plus the mandatory one by the law in Canada). Remember that you are renting a vehicle that isn't your property, so the owner (usually the bank) requires that you agree with the fact that the car insurance policy includes this coverage.

Be prepared, quote the model you want and go with and avoid surprises. Companies like Kanetix.ca run fast online Quotes on more than 50+ Canadian Insurance Providers. If you 're going to run one right away, follow this link.

Know Your Credit Score

Your Credit Score will define what will the Interest Rate be at the moment of negotiating with the Finance Specialist. I wouldn't say it is definitely a must, but if you are a newcomer to Canada, you have had recent debt issues, or you think it is a good idea to know it in advance, then go ahead and verify it with TransUnion.

Still, if it is low, I would suggest you evaluate the chances of either looking for financial help or applying to a Car Loan Specialist such as CanadaDrives.

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Your Car Will be Sold Again

Once you are done with your "rent," the car returns to the dealer to be "re-prepared" and published again on the "Used Vehicle" listings of the dealer website. This is the typical sale cycle of a leased car.

Now, did I mention the Residual Value a few lines before? Well, this will be the minimum price the vehicle will have when published for sale again. It will be up to you to decide if you want to keep it or if you want to start a new lease at the end of the current term.

Lease Protection Is Important, Depending The Case

30 days prior to the return of your vehicle to the dealer, someone will set up with you (at your convenience) to check the status of the car. Unless you are expecting to keep your vehicle right at the end of the lease, the Lease Protection will help you get rid of expensive aesthetical repairs (excluding the mechanical problems) on the car.

The Lease Protection price is usually between 700 - 1,800CAD and use to cover from 6,000 to 10,000CAD on repairs. . If you plan to keep your car after the lease, don't bother on getting one, but if on the other hand, you will lease a new one, ensure to be protected on the current lease.

Additional Resources

Are you interested in learning more about Car Leasing in Canada? Here I post a list of resources you'll find very useful for onboarding on this fantastic way of solving your transportation needs:

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About the author

Jorge Diaz is a passionate car lover, winter driver & Software Engineer. For the last 10 years, he has built Online Solutions used by more than 5,000 companies across the globe. He founded LeaseCosts in 2016 with the purpose of simplifying and helping people to better understand the complex market of new vehicles in Québec and Canada. You can connect with Jorge in LinkedIn or send him a direct message.