Archived — In the Driver's Seat (3)

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Buying a consignment vehicle

You may choose to buy a consignment vehicle. This means that the seller has made an agreement with a motor dealer to sell the car on the seller's behalf. The car remains the property of the seller until the dealer has sold the vehicle.

Again, as is true for all types of pur-chases, it is important to have the vehicle inspected by a mechanic before buying a consignment vehicle. Find out from the dealer the vehicle's history and request repair bills and maintenance records for review. Check for any liens that may be registered.

Make sure that you get a detailed receipt or contract from the dealer that includes the following information:

  • a complete description of the vehicle (including year, make, model, serial number and odometer reading);
  • the date of sale;
  • your name and address;
  • the dealer's name and address;
  • the price (including any trade-in value and additional fees);
  • a description of any problems with the vehicle;
  • a description of any warranty coverage; and
  • a note that the vehicle was consigned.

Leasing a vehicle

Leasing may be a convenient way to get a vehicle, but it may not be the cheapest. Your lease agreement outlines the terms and conditions of the agreement and your rights and responsibilities. Take the time to read the entire contract before signing. If you don't understand something, ask for an explanation. If the dealer promises you something, get it in writing. If you are considering leasing a used vehicle, you should have it checked by a mechanic before leasing it.

Compare costs and think about your needs and choices before you lease. Be sure to ask about what fees you'll pay at the beginning of, during, and at the end of the lease. Make sure you consider the same factors when you are comparing leasing with buying. There are various calculators on the Internet that can help you consider your options as they apply to your situation.

Open-end and closed-end leases

Leases are contracts in which you make a fixed number of payments during the specified term of the lease and you return the vehicle to the company when the lease is over. There are two kinds of leases: closed-end and open-end. In both open- and closed-end leases, the projected depreciation of the vehicle is estimated and calculated into your monthly payment.

In an open-end lease, you, the lessee, are expected to pay any difference between the retail value of the vehicle at lease-end and the residual value (estimated wholesale value) of the vehicle in the lease agreement. What this means is, at the end of the lease term, if the vehicle is worth less than the residual value, then you pay the difference. Keep in mind that the lessor determines the residual value. Before you sign the contract, ask how the retail and residual values are determined.

In a closed-end lease, you usually have no more payments to make at the end of the contract, unless the vehicle has been damaged by excess wear and tear. You may also have to pay a kilometre charge if you have driven a greater distance than the limit set out in the lease contract. This can be expensive, as charges often range from 7 to 12 cents for every kilometre driven over the limit. Basically, you have three options under a closed-end lease when it expires: you may return the vehicle, buy the vehicle (if the lease has a purchase option) or lease a new vehicle.

When leasing, you are responsible for maintaining the vehicle in accordance with the owner's manual, unless you have a full-maintenance lease. You are also responsible for any repairs. If you fail to follow through on these respon-sibilities, you may be charged for excess wear and tear at the end of the lease term. You are also responsible for paying the registration and insurance.

If there is a dispute or you feel there has been a misrepresentation by the lessor, consult your provincial or territorial office of consumer affairs.

Ending a lease

Pay particular attention to the conditions regarding ending the lease. Keep in mind that when you are considering entering into a lease agreement, you may not have the right to end it early. A lease agreement will usually outline whether or not it can be terminated early and what conditions and costs apply in this situation.

It can be very expensive to end a lease. If the agreement doesn't contain information about early termination, you should request that the lessor provide you with that information in writing before entering into the agreement.