Everyone can’t buy a car. Thus, leasing cars is a more effective and popular option among these people. In addition, you get to use a new vehicle for a specific period, and the cost is lesser than buying it. All these perks make car leasing a very suitable option.
However, this option comes with tremendous responsibility as well. For instance, getting into an accident is more complicated with a hired car than your own car.
That is because an insurance claim is very different when you get into a crash with a leased car. So that is why it is essential to know about the options if a leased car falls into an accident.
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What Happens if You Crash a Leased Car
In many ways, an accident involving a leased car is similar to accidents involving any other kind of vehicle. To begin with, road accidents are always tense, regardless of the type of vehicle involved. In most cases, there is no way to avoid that reality. Additionally, everything you should do following a lease car accident is the same as it would be following a car accident in general. The other driver should still be given all relevant data, and you have the right to seek financial damages compensation. However, when insurance companies are involved, particularly in accidents involving leased cars, things can grow complicated.
Car leasing is like when you rent a car for a specific period without going through the hassle of taking a car loan. First, however, you have to make a monthly payment for the car you are using.
Besides, while you register for the lease, you will have to make a payment too. That’s like a down payment. Only the amount is much smaller than the down payment of buying a car.
When the specific period ends for which you have rented the car, you will have two options. One is to return the vehicle, and if you have enjoyed the car too much, you may buy it as well.
That will cost the exact market value. Now you may ask why you will again pay the absolute market value since you have paid the rents.
That is because the car was on rent. You didn’t own it back then. However, as long as the vehicle is with you, maintenance is your responsibility.
Care Lease and Regular Insurance
When you are residing in Canada, and you drive, car insurance is mandatory. The car you drive can be your own, or you have it on a lease, but the condition is applicable.
Policies for leased car insurance are trickier. First, if you are getting a car on a lease, you must get third-party accountable insurance. The primary function of these insurances is to pay for the damages if any accident takes place.
These insurances are there to pay for physical or property damages to the party that the in-fault driver harms. However, if the in-fault driver was driving a leased car, he or she will have to pay settlement money. This settlement money is not covered by comprehensive insurance.
If you are leasing a car, you must have Gap insurance. Your comprehensive insurance will cover the damages for the victim party and the car price. But what about the settlement money?
When you are signing your car lease agreement, you will notice serious conditions for settlement money. At first, you must know what settlement money is.
Let’s say you are taking a car on lease for three years. You are obliged to pay your rental fee for every month of these three years. Now, what if you get into an accident just after six months of taking the car?
You will be obliged to pay the rental fee for the rest of the two and a half years even then. The remaining rental fee is the settlement money, and your gap insurance is supposed to cover it. So make sure you read your car lease agreement thoroughly.
Hence, you will know whether you have the right insurance to back you up when something terrible happens or not.
Leased Car Accident
If you ever get into an accident while driving your leased car, call the police first. When you will call and explain the whole situation, there is very little chance of you being framed as the in-fault driver. So do that even if the accident is nothing major.
If you have an injury from the accident, seek medical assistance, even if you can do it independently.
Do not be rude to the other party involved. It will be best to take photographs of the scene and gather shreds of evidence as much as possible. Amidst all these, do not forget to call the lease company.
If you call the lease company too late, you might be penalized financially. However, I am sure you will not want any financial penalties at this point.
Contact your insurance company. Please do that through your lawyer. Even your insurance company will put up a fight to lessen the amount of the money. Involving a lawyer will make the process more tranquil.
Know More: Car Accident Lawyer
FAQ: Leased Car Accident
Does an Accident Affect My Lease?
When you report your accident, an officer from the lease company will come to examine the damages. How your lease agreement will be affected depends on the damages.
If your car is repairable, you may face a probation period, and after that, you will get back your vehicle. However, if your car is ruined, you will not get another car. Instead, you will pay the vehicle’s value and the settlement amount for the rest of the lease period.
What Happens When You Get Into a Car Accident with a Leased Car?
The insurance company of the in-fault driver will pay for all the damages. So buckle up, it is going to be an ugly experience.
However, if the car was ruined, you will need to pay the settlement amount. That is why as I have mentioned earlier, you should get Gap insurance. It will take care of the settlement money. So don’t forget to bring your Gap insurance first.
Who Pays for Repairs on a Leased Vehicle?
The insurance of the in-fault driver will pay the repair cost of the leased vehicle. Try your best not to get into an accident. But, even if you get into one, make sure you are not at fault. Even though insurance is there to pay for such incidents, it isn’t easy to make them do that in real life.
Going through an accident is a lot in itself. You don’t want to experience all the other horror too. Thus, don’t be careless as insurance is going to cover your repair cost. Unfortunately, the road to making them do that is not very smooth.
Do You Have to Repair a Leased Car?
Well, you are responsible for the maintenance of the leased car while it is with you. Therefore, whenever the car needs a maintenance repair, you are responsible for it. Consequently, it would be best if you took good care of the vehicle.
The leasing company can charge you at the end of the lease period if they see the car wasn’t well maintained. This term is usually mentioned in the car lease agreement.
It would help if you always abode by the terms and conditions that were mentioned in the agreement. Or else, at the end of the lease period, you will have to pay a fine.
Why Should You Never Lease a Car?
I would suggest never lease a car because it has no long-run outcome. You have to treat the car as an investment when it is not. You will get nothing at the end of the lease period.
Besides, it would be best if you always were extra careful given all the insurance issues. So in my opinion, it is better for me to save that money and get a car of my own.
It will remain yours even if it is an expensive option. Buying a car is an investment. Getting one on lease isn’t.
Why Should You Never Put Money Down on a Lease?
I believe rather than putting money down on a lease, take a car loan. First, that’s because you will not save an evident amount of money by taking the car on lease. Second, that’s because even for leases, monthly installment changes with the change of interest rates, just like banks.
Thus, there is no use for it. Because if you buy a car, it will remain yours after repayment of the loan, for lease it isn’t the same.
What Happens If You Can Repair the Car?
As I have mentioned before, if the car is repairable, you will face probation. After the probation, you will get to keep the vehicle until your lease term ends. You will have to pay the repair charges.
Summary: Leased Car Accident
No accident is pleasant. All kinds of accidents have their consequences. However, since getting a car on lease doesn’t give you ownership, you are using someone else’s property.
We have all been taught that we should use it delicately when we borrow something from a very young age. Or else, the consequences are ugly.
Taking a car on lease is very similar to borrowing a car. Hence, when you are in an accident with your leased car, situations might get ugly.
Getting hurt physically is one ugly situation. Worrying about money in that situation is another level of stress. But, unfortunately, if you wind up in such a case, you know the options if a leased car falls into an accident.