Lease and Finance Information

 Itching to try a lease takeover?

Our experts have some advice

• Ensure the lease is close-ended, whereby the leasing company is guaranteeing the buyback price. Otherwise, you could be required to pay the difference between the residual price and the vehicle’s market value at lease end.
• When you are transferring your lease to a second lessee, make sure the leasing company absolves you of all obligations (get it in writing). Until recently, some companies tried to keep the first lessee on the hook for any costs should the second lessee default, but that stipulation has largely disappeared today.
• If you’re shopping for a lease takeover, try asking for a bigger cash incentive. About 80 per cent of listings are resolved in 60 days, but many lessees are keen to close the deal quicker out of need.
• Many luxury and specialty models are leased rather than purchased, and they will often show up on lease exchange sites before they’ll show up on used-car lots.

Relevant Articles

The Toronto Star
Jun 16, 2010: The Pros and Cons of Ending a Lease


Bert DeSouza enjoyed driving his 2006 Subaru Legacy GT wagon until a job change that allowed him to work at home meant his expensive Subie would languish in the garage. It was time to part company — a formidable challenge when you’re leasing. “I had 11 months left on the lease at $606 per month. Returning it early would have required paying a penalty in the thousands,” says DeSouza. Read more>>


Do I need an extra-cost warranty?

For a new vehicle: probably not necessary, certainly not if the vehicle has above average reliability. Warranty company data shows they pay relatively little on a new vehicle warranty in claims for vehicles with a reliable record.

A manufacturer's plan is always preferable. Some reasons:

Coverage is usually more generous.
Greater security, less risk of insolvency.
No written maximums for claims.
Universal acceptance by the dealer dealer body.

Bumper to bumper coverage is preferred.

AVOID: high deductibles, say over $25 or $50 per visit (zero is best).
LESS DESIREABLE: Coverage limited to powertrain. There's a lot of repair value tied up in electronics, electrical accessories, and air conditioning. Those are priority items for coverage.

New vehicles for which an extra-cost warranty is strongly recommended: any Cadillac, large 4-wheel drive domestic truck, Saab. Unfortunately both Audi and VW have very high maintenance and repair costs but don't have factory supported plans.

Among the automakers, Chrysler and Toyota are stingy. Chrysler can deny coverage for transmission failures on the basis of abuse. In fact the Chrysler minivan transmission to 2000 does not stand up to winter conditions. Toyota: engine and transmission failures sometimes unfairly attributed to lack of maintenance. Keep your records.

Used car warranties:

Not always extra cost. Many automakers and independent companies prefer to see the warranty built in to the price of the car. The reason is marketing: the consumer is more likely to pay a higher price for the car with a bundled warranty. Also, the consumer is unlikely to think of dropping the warranty to negotiate a lower price.

Prefer an automaker or an INSURED aftermarket company. The Used Car Dealers Association has a list of the six aftermarket insured companies in Ontario from over a dozen operating here. BC, Alberta, Quebec all require some type of insurance or trust account. Incredibly, companies are unregulated in Ontario, Canada's largest market. APA's advice: in the absence of government protection, stick with the UCDA list.

Curiously, VW which has no new-car extended warranty, has an excellent used car warranty offered through its dealers for $500 bumper to bumper for two years, with no deductible. This is a MUST purchase with a used VW from a dealer.

Caveat: you almost never can consult a copy of the warranty before sale of the vehicle. What you are given is a pamphlet. In some cases, the actual warranty is sent by mail several days after the sale.

Things to watch out for:

1) maximums for each claim should be $2,500 or higher. (Several powertrain warranties sold in Ontario have a maximum for all claims of only $600-$1,000, which is clearly insufficient to pay for the cost of even one repair.)

2) Oil change or other maintenance requirements that go beyond the owner's manual. These are occasionally used to void coverage, whether or not your failure to perform the maintenance is the cause of the breakdown. Keep your receipts.

3) Coverage limited to powertrain and excludes piston ring wear. In this case, all you're getting is a driveline warranty and a very limited sort of engine coverage. The best is major components coverage including electrical systems and air conditioning.

Used car warranty prices do not adequately reflect the extra cost of repairs to vehicles with a poor history, even when the company has a sliding price scale. Like-for-like, a used Chrysler or Saab will cost the warranty company a whole lot more than a used Toyota or Infiniti. That's a good tip for warranty buyers as well.

CONTRARY TO POPULAR BELIEF THERE IS NO INDEPENDENT INSPECTION OF A USED VEHICLE BEFORE A WARRANTY IS ISSUED FOR IT. The warranty company sells the policy on the basis of the dealer's good faith. If the dealer is in bad faith and the items do not fall under the warranty coverage, guess who's holding the bag... Also, warranty companies, including automaker plans, never refuse coverage to vehicles on the basis of prior collision damage that has been repaired and not declared.

Additional warranty company trick: Sell the plan for almost nothing, say $69, to the dealer. Limit claims to $600, which is in the fine print buit
never told to the customer prior to the sale. In the event of a repair, the shop gives the warranty company a commercial client's volume discount of 30%, which is never communicated to the customer. The customer sees only the retail bill for the repair which shows the full price, with a deduction up to $600 for the part the warranty company was supposed to have paid. In fact no money changed hands as the warranty company never paid the garage.

Final note: warranty companies selling used cars sometimes experience the consequence dealer fraud and consumer neglect:

1) bad cars with pre-existing problems submitted as a warranty repair a couple of weeks after the sale

2) consumers who neglect small problems until they become big problems and then report a warranty claim.