A car lease is an alternative option for financing. While both involve monthly payments for a fixed period, you won’t own your car at the end of the lease. Think of it like paying to drive the car instead of paying to own the car.
If you choose to lease the monthly payments will include rental charges, interest and taxes, and depreciation of the vehicle while you drive it.
Every driver in Ontario, including ones that lease a car, must have insurance coverage.
Leasing a car is ideal if you need a new vehicle every four years or less. The cost of maintaining a lease is much less than purchasing new cars at the same rate.
Many Canadians also lease cars because the monthly payment is lower on leased cars than ones bought outright. Plus, the warranty on a leased car stays valid for the entire length of the lease, instead of being based on the number of kilometers driven.
Another benefit of leasing a vehicle is that if the car is used for business the payments are eligible to be deducted for tax purposes.
You’ll need car insurance regardless of whether you buy or lease. The process for getting insurance is the same in either situation.
While your car insurance quote won’t change, one major difference is the amount of car insurance your leasing company might require you to get.
When you own your car full coverage insurance is optional, but when you lease a car, collision and comprehensive insurance is mandatory. This means that leased cars typically require more insurance, and therefore higher premiums.
Many dealerships will offer GAP insurance when you lease your car or you can obtain waiver of depreciation coverage on a brand new vehicle from your insurance company.
As soon as you drive off the lot the value of your car depreciates, and insurance will only cover the current value of your car, not the sales price.
This is why gap insurance is something to consider. GAP insurance helps pay for the gap between the depreciated value of your car and the remaining amount you owe from the date it’s damaged or stolen.
GAP insurance can be useful even if the dealership doesn’t make it mandatory.
It can, but it doesn’t always. Some leasing and finance companies require a minimum liability coverage of $1 Million, as opposed to the minimum $200,000 required by the Ontario government.
That being said, $1 Million liability coverage is also offered to people who own their cars and can be a default option, so you might not have to pay more for that coverage. As always, it’s best to speak to your broker or insurer about such details.
You need insurance whether you decide to lease or finance a car. Luckily the process is the same and RATESDOTCA does the hard work for you. Compare quotes from Canada's top insurance providers to find the best available rates today.