Leasing & Auto Insurance in Canada

When you sign a car lease there are typically some guidelines you must follow with regards to insuring the leased vehicle. In the small print of the contract it will typically say that you need at least $1,000,000 in liability coverage when leasing. Check the insurance requirements before you sign the paperwork so that you can get a better idea of how much your auto coverage will cost. You can even get a quote for insurance before you sign the lease – that way you can draw up a budget for your monthly transportation costs. Don’t forget to include fuel costs when making your budget, unless you’re planning on leasing an electric car.

Financing vs. Leasing


Here are some of the advantages of financing:

-At the end of your financing agreement you own the vehicle.
-There are typically trade-ins discounts available if you currently have another vehicle.
-If you make a big down payment then your monthly payments will be much lower over time.
-You can drive the vehicle as much as you want – there are no restrictions.
-You can customize the vehicle and alter it to suit your needs.
-You will not be fined for dents or scratches on the vehicle.

Your financing contract will determine the amount of insurance that is required, much like a leasing agreement. It is often close, if not the same, as the mandatory auto insurance policies that are required by your province.


Here are some of the advantages of financing:

-You can drive a new vehicle more often because a lease term is typically shorter than a finance term.
-You only have to pay taxes on your monthly finance payments.
-There are no trade-in obligations that need to be met.

There are a few things you should think about before jumping into that lease. When you lease a car you are not the owner of that vehicle, which means you are 100% responsible for its condition. You may be fined if, at the end of your lease, the lessee is not satisfied with the condition of their vehicle. If you drive a lot then a lease probably won’t work for you. Most lease agreements will limit the amount of kilometres you are able to drive each year. The GM Canada website says that 24,000 kilometres is the maximum amount for most leases. You can purchase more kilometres at the start of the lease though. Charges for excess mileage are very common, and are also very expensive.

How to Negotiate the Terms of a Lease

Comparing a lease by the monthly payments is a bad idea. If you do decide to lease a car then take some time to read the lease requirements and conditions before signing anything. There could be major financial penalties for terminating your lease or for going over your annual kilometrage.

To save money on maintenance costs you might want to think about leasing for the length of the vehicle’s warranty, and not any longer than that. If you do this you will not be responsible for the repairs and maintenance costs of that car. They will be covered by the manufacturer. It is important to match the term of the lease with the length of time you want to use the vehicle. If you’re planning to drive the car for three years then you want your lease to be that long also.