Leasing a car in Canada works exactly the way it does in the U.S. You go to a leasing company and choose from a selection of vehicles, deciding on which leasing plan is best for you. You often have to negotiate the most affordable interest rate and choose whether you want an operating or a capital lease.
Things You'll Need
- Financial calculator
Consider whether leasing works better for you than buying a car. A leasing arrangement often includes restrictions on how much you can drive the car and imposes other maintenance costs. Debate the financial pros and cons of leasing before you plunge in. You also have to find out if your car has a low depreciation rate. Many new luxury cars have a low depreciation rate because of their premium amenities. In fact, one of the benefits of leasing is that you can lease a car you would not normally have the means to purchase.
Find out if your car has a low depreciation rate. You may want to consider leasing a brand-new luxury car, because it usually will have an extremely low depreciation rate.
In Canada, as in the U.S., you can purchase either an operating lease or a capital lease. An operating lease means that you can purchase the car at the end of the lease term, though it will be costly. A capital lease means that you purchase the car at the end of your lease for a small amount, since this lease generally has a longer term.
Calculate a reasonable interest rate of leasing a car while you negotiate your lease plan. Your interest rate is flexible because it hinges on your credit score. Either calculate it yourself using a financial calculator (see Resources for a link to one) or ask your accountant. Most importantly, shop around for different interest rates to find the best deal on your desired car.
Once you've decided on the best quote, visit to the car leasing company that features this quote. Scrutiznize the leasing contract before you hand over your down payment, as the contract may contain you may not have noticed the first time.
Tips & Warnings
- An operating lease is better for short-term use of a vehicle, because the vehicle has to be returned to the leasing company at the end of the term. Moreover, a capital lease is better for long-term use of a vehicle, because the lessee has the option of purchasing the car at the end of the term.
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