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==What is a lease?== | ==What is a lease?== | ||
A lease is an agreement to rent and 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. You may also have to pay a security deposit. After that, you make monthly payments. | A lease is an agreement to rent and use someone else’s property, in this case, a car. A lease is usually long term. And usually, you must be at least 19 years old to sign a lease. It can last from several months to several years. At the start of a lease, you make a first, or initial, payment. You may also have to pay a security deposit. After that, you make monthly payments. | ||
Leasing is an alternative to buying—both have advantages and disadvantages. If you lease, you don’t own the car. And you have different rights and responsibilities than if you buy. | Leasing is an alternative to buying—both have advantages and disadvantages. If you lease, you don’t own the car. And you have different rights and responsibilities than if you buy. | ||
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[http://www.bclaws.ca/civix/document/id/complete/statreg/96410_01#section16 Section 16(c)] of the ''[http://www.bclaws.ca/civix/document/id/complete/statreg/96410_01 Sale of Goods Act]'' requires a person selling or leasing goods to ensure the goods have no lien or charge on them, or to tell the person leasing the goods about the lien and have them agree to the lease knowing about the lien. | [http://www.bclaws.ca/civix/document/id/complete/statreg/96410_01#section16 Section 16(c)] of the ''[http://www.bclaws.ca/civix/document/id/complete/statreg/96410_01 Sale of Goods Act]'' requires a person selling or leasing goods to ensure the goods have no lien or charge on them, or to tell the person leasing the goods about the lien and have them agree to the lease knowing about the lien. | ||
Section 101 of the ''[http://www.bclaws.ca/civix/document/id/complete/statreg/04002_00 Business Practices and Consumer Protection Act]'' requires the dealer to give you a Lease | Section 101 of the ''[http://www.bclaws.ca/civix/document/id/complete/statreg/04002_00 Business Practices and Consumer Protection Act]'' 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. | ||
==What is a cooling-off period?== | ==What is a cooling-off period?== | ||
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==What can happen if you have trouble paying a lease?== | ==What can happen if you have trouble paying a lease?== | ||
If you default on a consumer lease (stop paying it), the dealer or creditor may be able to take the car back (seize it) or sue you for all remaining lease payments. Depending on the type of lease (a security lease or a true lease), they may be able to do both. You would need legal advice on that and on whether the “seize or sue” rule and the “two-thirds rule” apply. Business leases are different—a dealer or creditor may be able to sue you and seize the car. Generally, your rights and responsibilities depend on whether you sign a lease or a secured lease agreement. You can talk to a lawyer before you lease to find out what type of agreement you are signing. As well, check script | If you default on a consumer lease (stop paying it), the dealer or creditor may be able to take the car back (seize it) or sue you for all remaining lease payments. Depending on the type of lease (a security lease or a true lease), they may be able to do both. You would need legal advice on that and on whether the “seize or sue” rule and the “two-thirds rule” apply. | ||
The dealer or creditor could also extend a lease if you are having trouble paying it. That might create a new lease and the dealer or creditor would have to give you a new disclosure statement. Even if an extension is not a new lease, it would change the term and your total cost, and those changes would have to be disclosed. And if the dealer or creditor invites you to delay a payment, they must tell you if you will pay interest on the delayed payment. | |||
Business leases are different—a dealer or creditor may be able to sue you and seize the car. Generally, your rights and responsibilities depend on whether you sign a lease or a secured lease agreement. You can talk to a lawyer before you lease to find out what type of agreement you are signing. As well, check script [[Buying Goods on Credit, Credit Cards and Credit Bureaus (Script 246)|246]], called “Buying Goods on Credit, Credit Cards & Credit Bureaus”. | |||
==What are the differences between consumer and business leases?== | ==What are the differences between consumer and business leases?== | ||
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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. Some dealers may also 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. | 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. Some dealers may also 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. | ||
The dealer | The dealer can use your security deposit to pay for kilometer overages or damage to the vehicle that must be repaired. The lease agreement should say when you get your security deposit back and when the dealer can keep it. | ||
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 [http://mvsabc.com/glossary/ glossary of buying terms]. | 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 [http://mvsabc.com/glossary/ glossary of buying terms]. | ||
How a dealer ensures that a vehicle meets the ''Motor Vehicle Act'' is a business decision—the Act does not say how. Generally, a dealer will do an inspection to ensure | How a dealer ensures that a vehicle meets the ''Motor Vehicle Act'' is a business decision—the Act does not say how. Generally, a dealer will do an inspection to ensure a vehicle meets the Act. Depending on the original lease, the dealer may charge you for the inspection. Discuss it with the dealer before you agree to lease a vehicle. | ||
==Summary== | ==Summary== | ||
Leasing a car is quite different from buying one. If you decide to lease, you have less protection than if you buy. Leases are usually long term and normally help the dealer more than you, the consumer. Read the lease agreement carefully and consider taking it to a lawyer before you sign. | Leasing a car is quite different from buying one. If you decide to lease, you have less protection than if you buy. Leases are usually long term and normally help the dealer more than you, the consumer. Read the lease agreement carefully and consider taking it to a lawyer before you sign. | ||
For more information on leasing a car, check the [http://mvsabc.com/consumers/resources/vehicle-buying-guide/ buying guide] 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). | For more information on leasing a car, check the [http://mvsabc.com/consumers/resources/vehicle-buying-guide/ buying guide] on the website of the [https://mvsabc.com/ 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 | [updated June 2018] | ||
'''The above was last reviewed for accuracy by | '''The above was last reviewed for accuracy by Ian Christman and edited by John Blois.''' | ||
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