Your Rights with Leasing

Leasing is a common way to finance cars and trucks, furnaces, computers or home furnishings.

Leasing may be appealing as a more affordable way of acquiring goods, since you’re paying a monthly or weekly fee rather than the full price up front.  But the price of this convenience can sometimes be steep. A lease includes interest charges, which can increase your total cost considerably. 

Leases – except property leases – come under Ontario’s Consumer Protection Act, 2002. Sometimes they may be called “lease to own,” or “rent to own.” They’re still leases.

Businesses offering leases must provide a written disclosure statement that includes the:

• length of the lease term
• amount, timing and number of payments to be made
• “implicit finance charge,” sometimes called the total cost of borrowing
• annual percentage rate (APR). 

This disclosure statement must be provided to you before you sign the lease or make any payment. If you do not receive it, you may not have to pay some of the charges.

Review the statement carefully to make sure you understand the total cost of the lease.

Pay particular attention to the annual percentage rate (APR). The APR takes all the costs of borrowing into account and expresses them as a simple annual percentage. This makes it easier for you to understand the cost of your lease, and lets you compare it with other financing options, such as a loan, to determine your best option.  

Types of Lease

The Consumer Protection Act defines three types of lease:

• in a closed-ended lease, you make payments for an agreed-upon length of time of four months or longer and then return the item
  
  check the contract for terms governing the return. Are you responsible for extra charges based on wear and tear? Who decides how much wear and tear is reasonable? How much extra might you have to pay at the end of the lease?



• an open-ended lease continues for an indefinite length of time, until one of the parties takes steps to bring the lease to an end



• in a residual obligation lease (a type of open-ended lease) you may be responsible for additional charges, depending on the value of the good at the end of the lease.  Such charges cannot exceed three average monthly lease payments

Learn more about leasing cars and trucks at the Ontario Motor Vehicle Industry Council website.