After you sign your lease contract, you’ll meet the finance manager who will take care of the credit application. You should find out fairly quickly if you’re approved, however in some cases it may take up to 24 hours before you know.
Once you’ve been approved for the lease and the vehicle is in your possession, you’ll need to contact the leasing company if you have questions about your lease. The dealer is there for you to service the vehicle but they have no hand in dealing with your payments.
Cooling Off Period
It does not exist. There is no cooling off period or a chance for you to change your mind. After the contract is signed you cannot cancel the deal, for the most part. The dealer may be willing to cancel the contract but you’re looking at thousands of dollars in fees to break the agreement
If there are errors on the lease contract that you or the dealer didn’t catch, be sure to inform the dealer and leasing company immediately.
Your Obligations
Make sure that you maintain the vehicle as if you purchased it. You’ll need to make sure the vehicle stays insured, your payments are made on time and the interior is kept in relatively good condition.
Unless you get prior approval from the leasing company, do not make any modifications to the vehicle. Remember that anything you add on may need to be replaced to factory specs when you turn the vehicle in. If the leasing company needs to make those changes, expect to see a bill for the work.
Maintain your vehicle according to the schedule in your owner’s manual. While you don’t need to use the same dealer to service the vehicle, ensure that the mechanic you use is professional and does high quality work.
Auto Insurance
When you sign a lease contract you’re agreeing to insuring the vehicle for the duration of the lease. The coverage will vary depending on your state/province so be sure to shop around.
GAP Insurance is an important coverage to have. It is typically cheaper to have your insurance company add it to your policy than for it to be added onto your lease. Make the call to your insurer, it may save you money.
You’ll also need to make sure that the leasing company is named as an “additional insured.”
Watch Your Mileage
Your lease contract will outline the allowed mileage during the term of your lease. If you’re coming up to the number of allowed miles on your lease, you have a few options:
- Car pool to work/school
- Rent a vehicle
- Swap your vehicle with someone who doesn’t drive as much
Depending on the mileage on your vehicle at the end of the lease it may make sense to buy the vehicle. It typically will be beneficial to buy the vehicle at lease end if you’ve underused the allowed mileage.
Planning to Move?
If you’re planning on moving and have a leased vehicle, check your fine print. The lease terms may not allow you to move the vehicle out of the country.
Inform your leasing company of a move since sales tax will have to be adjusted to the state/province you move to.
Get Into An Accident?
If your vehicle is lost, stolen or in an accident, report it to your insurance company and leasing company immediately. Your auto insurance will cover the damages (as long as you aren’t charged with a DUI or other criminal conviction). Choose a reputable shop if your vehicle is in an accident.
If the vehicle is a complete write off, the insurance company will pay the leasing company, not you. Your insurance will only cover the value of the vehicle which is why it’s important to have GAP insurance. Remember that vehicles depreciate in value.
Consider this example:
You leased your car with a cap cost (purchase price) of $30,000. After one month your vehicle will be worth $27,000. If you’re in an accident and your vehicle is written off insurance will only pay $27,000. That leaves you on the hook for the remaining $3,000. Unless you have GAP coverage which will cover the difference between the vehicle’s value and the amount owing to the leasing company.
Summary
With a leased vehicle, you’ll need more coverage than you typically would have. Be sure to maintain the vehicle the same way you would as if you had purchased it.
If you plan to move or are in an accident, make sure that you let your leasing company know as soon as possible.
