Leasing is becoming a very popular way to attain a vehicle, and if you know where to look, there are some great lease deals across Canada.
A car lease provides access to a new vehicle for a fixed period with the same monthly rate. Canadians want the security of a car that won't break down, and the option to get a new or “new-to-them" car when they want it.
When in the market for a leased car, the best deals are a balance between a vehicle that can hold its value and one that comes with the best discounts and incentives.
Read our comprehensive guide below to help you find the best car lease deal with confidence!
Whether or not a lease is the right option for you comes down to several factors regarding your lifestyle and budget. You need to ask yourself:
If you’re torn between leasing and buying, the Government of Canada's Office of Consumer Affairs’ lease or buy calculator can do the math for you.
If you decide that buying a car is the right option, it is wise to get pre-approved for your car loan first. Canada Drives provides a simple online pre-approval application that only takes a few minutes to complete.
With a pre-approval you can shop with confidence knowing exactly what you can afford, saving you time and avoiding any stress.
The best lease deals can usually be found at the end of the year when car manufacturers want to clear out old inventory. Spring and summer are also good as it's the prime selling season and you'll have lots of variety to choose from.
When shopping for a car, most auto leasing companies look for credit scores of over 650, which is what qualifies as "good" credit. If your score falls under this, specifically in the fair or poor range, you might have a tough time getting a lease from many car manufacturers and dealerships.
A lease transfer/takeover may also be an option. If someone wants to end their lease early but doesn't want to pay the big contract cancellation fees, they can arrange for someone to take over their monthly payments with the same terms. While this will still require a credit check for the new driver, the agreement will be less rigid than if you were getting a new lease outright.
Some car dealers offer lease-to-own deals, but it's not actually leasing. It's still a form of traditional car financing, which means you end up actually buying the car at the end of the term as opposed to giving it back to the dealer. Lease-to-own usually means fewer vehicle options and different contract terms than a standard lease.
If you're struggling with a low credit score or still building it up after some damage, these are some of the benefits of a lease-to-own agreement:
Depending on how flexible you are with your preferences, there are still some basic features that will make any car, any brand, cheaper. Always look at the MSRP to determine the end value of your car. You want to find a vehicle that both affordable for your budget and retains its value over time.
Here are a couple of tips to look out for when seeking out the best deal:
Doing your homework before walking into a dealership will boost your confidence and turn you into a savvy consumer. You'll be less likely to get swayed by fancy sales tactics. Here are a few things to keep in mind when you’re talking business with your dealer.
You can find these by looking at a manufacturer's website and using their "build your car" feature and see if there are any upcoming rebates or discounts. If you walk into a negotiation knowing there will be thousands of dollars off the vehicle's MSRP soon, it will put you in a stronger bargaining position.
The buy rate determines the interest rate you'll be paying as part of your lease rate, which dealers use to calculate APR. It's usually 4 or 5 decimal places (eg: .00120). Dealers make money by increasing the buy rate, so they can collect more interest to pay to the lender to finance the car to begin with. Just ask the dealer what the buy rate on the vehicle is and then multiply this figure by 2,400 to get your APR percentage. (Example: .00120 x 2400 = 2.88% APR.)
Why does this matter? If the APR percentage is more than the other cars being offered, there's room for you to negotiate. Bringing up the money factor shows you know what you're talking about when it comes to car financing, and in a manner of speaking, protects you from other “tactics" dealers may use to raise the retail price.
If you're feeling particularly bold, go ahead and just ask the salesperson outright if they'll give you a lease at their buy rate. Worst case scenario? They say no.
That's just an arbitrary ask, and it tells the salesperson you don't know what you want and they can essentially make the rules as they go (to a point). If you go in and have specific values in mind, you have more control of the negotiation.
Not many consumers haggle the way they should when it comes to negotiating a car lease the way they might if they were otherwise financing or buying, often because they think they can't. Not true! You have just as much wiggle room to move the price down as everyone else.
Always ask for a specific dollar value down.
Technically yes, and this is one of the big perks of leasing versus financing. That said, we stress that while you may not have to pay anything towards the car itself, you may be required to pay a few hundred dollars in fees upfront.
Financing often requires a few thousand dollars in the form of a down payment, while leasing is much more flexible. That said, less of a down payment upfront means higher monthly payments. Generally speaking, your monthly payment is $50 higher per $1000 that wasn't used as a down payment.
There are four main types of 0 down car leases: