How To Lease A Car in Manitoba?

Leases come with pros and cons and it’s important to know the facts before you dive head-first into such an important decision. If you’re considering leasing a car for the first time, you’ll need a little information about how it works.

So what’s the difference between buying and leasing a vehicle? The answer is similar to buying versus renting a home. When you rent a house you don’t completely own it, but you’re paying for the right to live there. When you lease a car, you pay the dealership for the right to drive it, but you’re not the owner.

Like an apartment or house rental agreement, you get to choose from varying lengths of contracts. Some lease agreements run for three years and can last up to five years. It may be possible to negotiate a shorter lease term, but different dealerships have different terms and conditions—depending on how long the lease is, the rates may change. Be sure to check with your chosen dealership and find out how it structures its long and short-term leases.

Leasing has another advantage: Your monthly payments will be lower. A lower car payment every month means more savings for you and your family. Maybe one more tank of gas for the yearly road trip or one more night at the favourite camping spot? The possibilities are endless.

KEY TAKEAWAYS

• A car lease is a great way to drive a new vehicle with agreed-upon monthly payments.
• The process of leasing a car in Manitoba is similar to buying one.
• There are certain steps you’ll want to take before signing a lease.
• ID, recent pay stubs, and a credit check are usually required when taking on a lease.
• Car leases and car loans have some things in common, but they are very different.
• There are both benefits and disadvantages to leasing, depending on what your needs are.
• You are responsible for paying the insurance premiums when leasing a vehicle in Manitoba.
• There are several types of lease options available for Manitobans.

WHAT IS A CAR LEASE?

A car lease is a great way to drive a brand-new or used vehicle for a fixed period of time with agreed-upon monthly payments. You don’t need to be approved for an auto loan with leasing and your monthly payments go toward the use of the car instead of toward the ownership of it. Simply put, you are basically renting the vehicle long-term. You’ll likely be required to come up with a down payment and your monthly payments will consist of rental charges, interest, taxes, and depreciation costs. Once the lease period is over, you get to decide whether to return the car to the leasing company, purchase it, or lease a new one.

HOW LEASE FINANCING WORKS IN MANITOBA

The process of leasing a car in Manitoba is almost the same as buying one. Follow the steps below and you’ll be in a leased vehicle in no time:

Check Your Credit Score: It’s important to be aware of your credit because most leasing companies will do a credit check. Each company will have its own standard, but you’ll want your credit score to be as high as possible. There are always steps you can take to raise your score in the months or years before signing a car lease. The higher your score, the better your interest rate will be.

Make A Budget: Car leasing involves monthly payments, so you should take the time to assess your finances. What is the maximum amount of money you can pay toward your leased vehicle each month? You should also include the down payment, car insurance, gas, and more in your budget.

Find The Right Car: Before you lease a vehicle, you should have a good idea of the type of vehicle that will suit your needs. Do you need lots of space for your family? Or do you need more of a luxury car for work purposes? Use the internet to do some research and narrow down your choices.

Find The Right Leasing Company: Once you’ve narrowed down your top choices for a car, it’s time to reach out to leasing companies in your area. Ask if they have the specific vehicles you’re interested in and schedule a time to see them. Go in with an understanding of all your options so you can negotiate if necessary—and never be afraid to walk away from a deal if it’s not what you want.

Take A Test Drive: Taking the vehicles you’re interested in for a spin is important because it allows you to be sure about which one you want. How does it feel? Does it meet your needs? Is it everything you expected it to be?

Make Down Payment: Even though down payments aren’t always required for a lease, it can be helpful to make one. Putting money down increases your chances of being approved and it also reduces your monthly payments.

Review Lease Agreement: Once you select a car, you’ll want to review your lease agreement closely. Pay attention to your monthly payment, down payment, length of the term, what maintenance costs you’re responsible for, and any other fees.

Negotiate Terms If Needed: Some dealerships in Manitoba will allow you to negotiate a shorter lease term, which is great if you just want to try out a lease to see if you like it. Remember that negotiating a short-term lease sometimes comes with different conditions than a long-term lease. Depending on the dealership, you might have slightly higher payments or higher interest rates, among other conditions.

Sign & Make Payments: Once you’re comfortable with the lease agreement and its terms, you can sign on the dotted line! This means it’s time to drive off the lot and start making payments. If you don’t miss any monthly payments, a lease can help boost your credit score—bonus!

Do Routine Maintenance: Remember to take care of your leased car with routine maintenance. Any damage could end up costing you a hefty fine at the lease end.

CAR LEASE REQUIREMENTS IN MANITOBA

The process of leasing a car is almost the same as buying one. You’ll need to bring all your paperwork (a valid ID, your driver’s license, recent pay stubs) to the dealership when you apply for your lease. After that, you’ll choose a car the same way you would if you were buying – by test driving until you find your favourite! 

Some dealerships in Winnipeg allow you to negotiate a shorter lease term, which is great if you just want to try out a lease to see if you like it. The biggest thing to remember is that negotiating a short-term lease sometimes comes with different conditions than a long-term lease. Depending on your chosen dealership, you might have slightly higher payments or higher interest rates, among other conditions. 

CAR LEASES VS. CAR LOANS

Car leasing and car loans are quite different from each other, but here are a couple of things they do have in common:

• They both sometimes require a down payment upfront
• Both involve agreed-upon monthly payments for a certain amount of time

Beyond those two things, car leasing is a lot different than obtaining a car loan. Here are the main differences:

• At the end of a car lease agreement, you have options for what to do with the vehicle (return, buy-out, trade-in, or new lease).
• Monthly lease payments are usually far less than car loan payments because you are paying to use the car, not buy the car.
• Lease contracts have restrictions such as the number of kilometres you can drive and the process for any repairs.

THE PROS & CONS OF LEASING A CAR

Pros

When it comes to leasing a car, there will always be some advantages and disadvantages. There are lots of pros to leasing a car including:

Lower Monthly Payments: Whether you’re buying a new car or paying for it through financing, it can be expensive. Because you’re only paying for the depreciation of the car, leasing a vehicle will often result in lower monthly payments than buying a car through an auto loan.

Opportunity To Try New Cars: Leasing gives you the chance to try out a new car every couple of years. You can test drive brand-new cars and experience the latest technology without having to worry about commitment or manufacturer’s warranties.

Options At End Of Lease: Once your lease contract is over, you have numerous options for what to do next. You can trade in your car for an upgraded model or a different vehicle entirely! You can also choose to buy out the lease.

Free Maintenance: Leasing a car sometimes comes with free vehicle maintenance such as oil changes, tire rotations, etc. throughout the duration of your contract. Always make sure to check the terms of your agreement or ask upfront when starting the paperwork.

Cons

There are several cons when it comes to car leases as well. Read the list below before you jump into a lease:

You Won’t Own The Car: Even though you’ll be making monthly lease payments, you will never own the car you’re driving. Once your lease term ends, you won’t have any equity to use toward the purchase of another ride. You can, however, sign a lease-to-own agreement if you decide you want to buy the vehicle at the end of the term.

Costs Can Add Up: You may be charged for any dings, damage, or wear to the vehicle at the end of the lease. If you decide to end your contract before the end of the term, you’ll also have to pay the remaining amount plus other additional fees, which can often add up to thousands of dollars.

Restrictions: Lease contracts will always include restrictive guidelines and if you break them you could face steep penalty fees. This includes annual kilometre caps, so you’ll have to always be mindful of how much mileage you’re putting on your vehicle.

No Vehicle Modifications: If you’re someone who likes to customize your vehicle with window tints or unique paint jobs, leasing might not be the best option for you. Most leasing companies won’t allow any kind of modifications to their leased cars.

WHO PAYS FOR LEASED VEHICLES?

Just as you would if you were financing a car or if you owned one outright, you are responsible for paying the insurance premiums when leasing a vehicle in Manitoba. Insurance premiums for leased vehicles can often be higher because of the coverage limits required. Here are the specific coverage requirements leasing companies will often ask for:

• Liability Coverage: Covers bodily injury and property damage to others if you are at fault in an accident.
• Collision Coverage: Covers damage to your leased vehicle from a collision, regardless of who is at fault.
• Comprehensive Coverage: Covers damage to your leased vehicle from events such as theft, vandalism, fire, or natural disasters.

• Gap Insurance: Covers the difference between the market value of the vehicle and the remaining lease balance if the car is totalled or stolen.

TYPES OF CAR LEASING OPTIONS

Manitoban drivers who are interested in leasing a car have several options. Your personal preferences, goals, lifestyle, and budget will influence the option you select. These are the most common car leasing options in Manitoba:

Standard Rental Leases: 

This type of lease involves signing a lease agreement to drive a brand-new vehicle. You will make monthly lease payments throughout your lease term and when the agreement is done, you’ll return the vehicle, extend the lease, or trade the vehicle in for a newer one.

Leasing To Own: 

Leasing to own gives you the opportunity to purchase the car once the lease agreement expires. You will make regular payments, but these might be weekly or bi-weekly rather than monthly, and you’ll accumulate equity with every payment.

Lease Takeovers: 

A lease takeover is when you take over the car lease of another driver before the end of their lease term. If you’re on a tight budget, this can be a good option because lease takeovers tend to be cheaper with lower upfront costs. However, it can also be risky because you’re taking on a lease you haven’t reviewed and a vehicle you haven’t inspected.

Leasing A Used Or Pre-Owned Vehicle: 

Leasing a used car is often possible with lease takeovers and lease-to-own agreements. Always hire someone to inspect the vehicle before signing up to lease a used car. You will also want to consider the potential for higher maintenance costs and less reliability as the car isn’t brand-new.

Credit score for leasing a vehicle in Winnipeg

The most common question about leasing is what credit score you’ll need in order to qualify for an agreement. If your credit score falls between 560 and 620, you should be good to go. At Birchwood Credit, however, we look at the bigger picture of your credit history and consider factors that a simple credit score might miss. We will always find you a solution regardless of your credit history, so you can feel comfortable knowing we have your back. 

HOW TO LEASE A CAR

Making the decision to lease a new car is big, and we don’t take it lightly. All the information out there can seem overwhelming but we’re here to help you every step of the way. If you think you’re ready to start your lease application, contact our Birchwood Credit team to get the ball rolling. 

If you’re still curious about leasing and want to know more about the process, read the benefits of leasing a vehicle on our blog. We can’t wait to see you at Birchwood Credit!