Valley First

Questions About Leasing

Figuring out whether to lease or buy can be a tricky decision. We've put together some helpful tips for you so that you fully understand the various aspects of leasing— that way, your decision is based on what's best for your unique situation.


Frequently Asked Questions

How does a lease work?

With leasing, you pay for the use of your vehicle. You only pay for the portion of depreciation used—in other words the difference between what it is worth now and the projected value at the end of the lease term, plus interest and taxes of course.

For example, if a vehicle is worth $20,000 new, and its projected value at the end of the lease term is $5,000, you would pay the amount of depreciation, which is $15,000 (plus interest and taxes).

Lease payments are almost always 30-40% lower than conventional financing. Leasing is a great way to defer taxes and spread out depreciation. Plus, leasing enables you to drive a newer, more expensive vehicle than if you’d financed it conventionally.

Is it more expensive to lease than to finance?

While the total cost of leasing and financing is very similar, leasing has the benefit of protecting you from future risk, such as costly repairs. By leasing, you could potentially always drive a vehicle that has the full factory warranty intact.

Am I able to apply a down payment or trade-in my current vehicle?

Yes. A down payment is essentially one large lease payment, which reduces the purchase price of your leased vehicle. As a result, the balance of depreciation over the term is lower, meaning your payment will be lower. However any down payment or capital cost reduction is taxable and will minimize the tax deferral benefit of leasing.

A trade-in is different because there are tax credits available. This means you will benefit from lower payments as well as minimizing the tax payable. Alternatively, the trade-in equity could be paid back to you directly, to be utilized as you see fit.

Am I able to lease any vehicle?

Yes, First West Leasing will lease both new and nearly new vehicles. It’s important to note that at a certain point older vehicles will lose the benefits of leasing due to the calculated depreciation and minimal warranty coverage.

Am I responsible for repairs and maintenance of my leased vehicle?

Yes, you will be responsible to follow the manufacturer’s maintenance requirements. This brings to mind one of the main advantages of leasing. With a leased new or nearly new vehicle, the manufacturer’s warranty is usually still in effect, potentially protecting you from any unexpected, expensive repair bills.

You will also be responsible for normal wear and tear should you return the leased vehicle to First West Leasing at the end of your lease term.

Am I responsible for the insurance?

Yes, you are responsible for insuring the vehicle with the amount of coverage required by your lease.

Can I purchase my vehicle at the end of my lease?

Yes. Should you elect to purchase your vehicle at lease-end or during the lease term, you would not be subject to any excess mileage charges or additional wear and tear considerations. If you wish to retain the vehicle, First West offers preferred finance options or an extension of your current lease contract.

What is meant by normal wear and tear?

"Excess wear" includes:

  • Glass that is damaged, chipped, cracked, scratched or has been tinted
  • Damaged body, fenders, metal work, lights, trim or paint; any scratch through the paint in excess of ¾ of an inch, and discernible body dents in excess of ½ inch wide
  • Missing equipment that was in or on the vehicle when delivered and has not been replaced with equipment of equal quality and design
  • Missing wheel covers, jack or wheel wrench
  • Missing or unsafe wheels or tires (including spare; snow tires are not acceptable)
  • Any tire with less than ¼ inch of tread remaining at the shallowest point, including the spare
  • Torn, damaged or stained dash, floor covers, seats, headliners, upholstery, interior work, or trunk liners
  • Any mechanical damage or other condition that causes the vehicle to operate in a noisy, rough, improper, unsafe, or unlawful manner
  • Any other damage whether or not covered by insurance

You will be responsible to provide up-to-date service records as per the manufacturer’s specifications at the end of the lease. Any vehicle repairs or reconditioning deemed necessary by the above excessive wear and tear guidelines are only applicable should the leased vehicle be returned to First West Leasing.

Will I be charged a fee if I exceed my allowable kilometers?

That depends…

Should you plan to return your vehicle at the end of your lease and the vehicle has exceeded the maximum allowable kilometers stated within the lease agreement, you will be assessed the stated fee for the excess kilometers driven because the depreciation component of the lease payment calculation is based on time and kilometers driven.

Should you choose to purchase the vehicle at the end of the lease, you won’t be subject to the excess mileage charges.

* Sometimes it is tempting to understate your usage (less kilometers driven) in order to lower the depreciation or your payment, but it’s usually better to forecast your allowable kilometers as accurately as you can and tailor the lease accordingly from the start. Make sure you discuss these options in detail with your lease professional.

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