What happens if I don’t make lease payments?
If you don’t make your vehicle lease payments, the dealer may take the vehicle back (seize it) or sue you in court for the balance owing on the lease.
Sometimes the dealer can do both. If the lease you have is seen to be a “true lease”, the dealer can seize the vehicle and sue you. If the lease is seen to be a “security lease”, the dealer must decide whether to seize the vehicle or sue. The courts have been developing tests that distinguish between these two types of lease. It is best to get legal advice on how your lease might be characterized.
What happens when the lease ends?
At the end of the lease, you have to return the vehicle to the dealer unless you have an option to buy it. The dealer will inspect the vehicle to ensure it is safe to drive.
Depending on the type of lease you have, you may owe additional money. If you have an open lease, the dealer will have estimated the vehicle’s residual value at the end of the lease. When the lease ends, if the vehicle is worth less than the residual value, you will have to pay more.
If you have an option to buy the vehicle and you choose to buy it, it’s best to have the vehicle inspected. Under BC law, all dealers are required to ensure that a leased vehicle meets certain safety standards before it is sold. To ensure this, it’s best to have the vehicle inspected prior to a sale—even if it is to you.
Your lease agreement will specify who is responsible for the cost of inspecting the vehicle. It may be up to you to pay this amount, but only if you agreed to this in your lease agreement.