Automotive

Required extended warranty on leased car?

  • Last Updated:
  • Jul 28th, 2021 1:54 pm
[OP]
Newbie
Oct 4, 2020
14 posts
8 upvotes

Required extended warranty on leased car?

I am on work permit which expires in two years (PR in progress),so I am going to lease a new car instead of getting financed. The term is 2 years and 1.09%, with 3000 down payment and 3000 for security deposit. I am fine with this.

However, the dealer told me the Toyota Credit requires me to get an extended warranty so that they approve my application. In my view it is a waste of money because I will never be able to make use of that money, when the factory warranty already covers that 2 years.

Can someone let me know if this mandatory warranty is a true thing from Toyota?

Thank you.
52 replies
Newbie
Aug 18, 2014
92 posts
71 upvotes
Calgary, AB
yeah thats bull shit and you dont need to get extended warranty since it will have warranty. also you shouldnt put a downpayment on a lease - that will be money you lose. you're better off paying more security deposit to reduce your lease payments or pay the higher monthly
[OP]
Newbie
Oct 4, 2020
14 posts
8 upvotes
How is the down payment the money I'll lose? I understand it is a prepaid money for my upcoming lease. increasing security deposit should not affect my monthly payments, because I will get back the security deposit when the lease ends. I don't like the down payment, yes, but my permit status makes the options quite limited.

The reason I am leasing is to build credit history, so that I can get a mortgage a few years later, otherwise I can just pay cash for this car.

By the way, does anyone know that if getting a phone and pay by instalments will have the same effects on building credit history? If yes I may pay in cash and get a phone too, although I don't really need a new phone.
Deal Addict
User avatar
Sep 9, 2012
4721 posts
3950 upvotes
Oakville, ON
Embrace wrote: I am on work permit which expires in two years (PR in progress),so I am going to lease a new car instead of getting financed. The term is 2 years and 1.09%, with 3000 down payment and 3000 for security deposit. I am fine with this.

However, the dealer told me the Toyota Credit requires me to get an extended warranty so that they approve my application. In my view it is a waste of money because I will never be able to make use of that money, when the factory warranty already covers that 2 years.

Can someone let me know if this mandatory warranty is a true thing from Toyota?

Thank you.
Requiring the purchase of a warranty in order to obtain credit is called "coercive tied selling" and is illegal under the Bank Act. I don't think that Toyota Credit Canada Inc (or Toyota Financial Services) is an actual Bank so they wouldn't be governed by the Bank Act, however, in the spirit of compliance I would very highly doubt that they would stoop to such an unethical business practice.

I'd suggest calling directly to the lender to confirm:

Telephone
(905) 513-8200
Toll-free: (800) 661-3062
Hours of Operation:
9:00am-5:00pm Local Time

https://www.toyota.ca/toyota/en/lease-vs-finance
Member
Dec 27, 2006
456 posts
230 upvotes
Canada
Dealer is lying to you. Go to another dealer or call him out on it.
[OP]
Newbie
Oct 4, 2020
14 posts
8 upvotes
I feel that it is shady too, but I have been talking nice. I will call Toyota tomorrow to confirm this, but anyway, with the warranty this has become a bad deal and I would be throwing money on something I don't use. I haven't explicitly said so but if they keep the warranty item I will walk away.
This has broken trust. Say if I still get the car, can I finalize the lease with Toyota directly after 2 years without doing business with this dealer again?
Member
Dec 27, 2006
456 posts
230 upvotes
Canada
Embrace wrote: I feel that it is shady too, but I have been talking nice. I will call Toyota tomorrow to confirm this, but anyway, with the warranty this has become a bad deal and I would be throwing money on something I don't use. I haven't explicitly said so but if they keep the warranty item I will walk away.
This has broken trust. Say if I still get the car, can I finalize the lease with Toyota directly after 2 years without doing business with this dealer again?
Yes. After 2 years you can do your lease return or buyout at any Toyota dealer.

I used to work for Toyota Credit so I can confirm that it is 100% bullcrap that you have to buy extended warranty. Obviously the business manager wants a commission.
Deal Addict
Nov 24, 2013
1711 posts
1027 upvotes
Toronto
Dealer is trying to rip you off. Tell him/her you'll get the extended warranty if they take it off the price of the car plus an additional $1000 off what you've already negotiated. Then you and the dealer can both laugh and you can then walk out and try a better dealer.
Deal Addict
Nov 12, 2004
2421 posts
1090 upvotes
Hometown
Welcome to Canadian Stealerships... Please post the name of the dealer once you get it all sorted as they really should be publicly shamed for such dishonesty.

I guess suggesting getting a used 2000 to 2002 Corolla would be out of the question. With a good PPI it could probably do the same as the 2 yr lease you are thinking about. Haul you from a to b in reliable mediocrity... With pre Covid pricing it might have even been cheaper LOL.
Deal Fanatic
User avatar
Oct 13, 2008
5094 posts
1999 upvotes
Embrace wrote:
However, the dealer told me the Toyota Credit requires me to get an extended warranty so that they approve my application. In my view it is a waste of money because I will never be able to make use of that money, when the factory warranty already covers that 2 years.
This is a TOTAL LIE!

They say that because what they are doing is called TIED SELLING ... which means to get one thing you are required to get another.

They cannot base a LOAN APPROVAL contingent on you buying something else. It is TWO UNRELATED DIFFERENT THINGS!

Give them the middle finger and go to another dealership!
16'x11' Living Room 11' Cathedral Ceiling. Hisense 65Q8G. Denon AVR-S740H 7.2 setup. Jamo Classic 10 280W Towers - FR+FL; Polk S35 - Center; Klipsch R51M - RR+RL; Klipsch R14M - Dolby FHR+FHL; Polk HTS10 Subwoofer x2. Unlocked Android Boxes from Taiwan x2
Newbie
Aug 18, 2014
92 posts
71 upvotes
Calgary, AB
Embrace wrote: How is the down payment the money I'll lose? I understand it is a prepaid money for my upcoming lease. increasing security deposit should not affect my monthly payments, because I will get back the security deposit when the lease ends. I don't like the down payment, yes, but my permit status makes the options quite limited.

The reason I am leasing is to build credit history, so that I can get a mortgage a few years later, otherwise I can just pay cash for this car.

By the way, does anyone know that if getting a phone and pay by instalments will have the same effects on building credit history? If yes I may pay in cash and get a phone too, although I don't really need a new phone.
if that's the case then you'll need to put down payment on a lease if you want a new car.

it's been a while since i've leased but if i recall correctly, putting down payment has its risks in case the car is stolen or gets written off. you'll probably have gap insurance to pay the difference but it would not cover your down payment amount. someone please correct me if im wrong
Deal Expert
Jan 15, 2006
16994 posts
15598 upvotes
Richmond Hill
As for building credit, just use a credit card.
Deal Addict
Aug 17, 2008
1292 posts
738 upvotes
Embrace wrote: I feel that it is shady too, but I have been talking nice. I will call Toyota tomorrow to confirm this, but anyway, with the warranty this has become a bad deal and I would be throwing money on something I don't use. I haven't explicitly said so but if they keep the warranty item I will walk away.
This has broken trust. Say if I still get the car, can I finalize the lease with Toyota directly after 2 years without doing business with this dealer again?
There are many Toyota dealers. This one does not deserve your business. Why not go elsewhere. I'm sure another dealer would even beat whatever crap deal this dealer is offering to you. Please let us know which dealer is lying to you.
[OP]
Newbie
Oct 4, 2020
14 posts
8 upvotes
EP32k2 wrote: As for building credit, just use a credit card.
I have been using credit card for like 4 years and not sure why they rejected my application with the reason that I have limited credit history. Probably I will need to call Equifax to understand. If I can figure out I already have some sort of credit history, although I don't have any loan, that will eliminate the need for building credit history and I may go with cash.
multimut wrote:
There are many Toyota dealers. This one does not deserve your business. Why not go elsewhere. I'm sure another dealer would even beat whatever crap deal this dealer is offering to you. Please let us know which dealer is lying to you.
I shopped around before going in and this dealer provided the lowest quote already. I will see how it turns tomorrow. I want the car but honestly this makes me want to back off.
Deal Guru
User avatar
Jul 12, 2003
12053 posts
4368 upvotes
Toronto
Agree with others, this is BS. You lease the car for 2 years and they obligate you to get extended warranty? This is so low in business practice, if they have to top sell something, sell the windows tinting or other accessories at least OP can somehow benefit from it.

This is another example of how shady dealership and car salespeople are (I'm not saying all of them, but very common).

Like the above poster said, mention the dealership's name and bring your business elsewhere . Don't feed those losers by giving them your business.

Everyone needs a pay check, but the way they treat their customers to earn extra dollars is so low.
Retired Forum Moderator February 2009 - June 2015
Deal Addict
Jan 1, 2013
1845 posts
1054 upvotes
Durham
Please name the dealership so others can avoid. Seems like they are taking advantage of you because you are on a work permit and hope that you fall for their BS. These shady dealerships need to be called out and not protected.
Sr. Member
Mar 22, 2004
565 posts
350 upvotes
London, ON
This is total BS....assuming that he actually said that, in those exact words, it is a total lie. I would suggest to him to drop another $1000 off the price of the car and you will forget about his lies and illegal behavior, and when he scorns, tell him to pound salt. Leave a bad Google review, and go somewhere else. BY NO MEANS should you reward this shitty behavior.

Car has full MFG warranty for 2 years. Its not even technically your car. Every time they tried to up-sell me on warranty/protection/undercoating on a lease, I just say "well, it's your car, so if you think it is necessary, YOU pay for it". They quickly change tactics afterwards.
Deal Addict
User avatar
Jan 8, 2009
1420 posts
436 upvotes
Brampton
Embrace wrote: I have been using credit card for like 4 years and not sure why they rejected my application with the reason that I have limited credit history. Probably I will need to call Equifax to understand. If I can figure out I already have some sort of credit history, although I don't have any loan, that will eliminate the need for building credit history and I may go with cash.


I shopped around before going in and this dealer provided the lowest quote already. I will see how it turns tomorrow. I want the car but honestly this makes me want to back off.
Toyota is very strict on giving credit to new comers. Speaking from what I saw happened to someone I know. Why don't you try Hyundai if you don't mind the brand. Hyundai seems to be very liberal with giving credit to new comers by looking at all students driving new Hyundai cars for delivery and Uber.
Deal Addict
Jan 8, 2007
2864 posts
1404 upvotes
Calgary
Embrace wrote: How is the down payment the money I'll lose? I understand it is a prepaid money for my upcoming lease. increasing security deposit should not affect my monthly payments, because I will get back the security deposit when the lease ends. I don't like the down payment, yes, but my permit status makes the options quite limited.

The reason I am leasing is to build credit history, so that I can get a mortgage a few years later, otherwise I can just pay cash for this car.

By the way, does anyone know that if getting a phone and pay by instalments will have the same effects on building credit history? If yes I may pay in cash and get a phone too, although I don't really need a new phone.
There is no good reason to put money down on a lease, ever. Unless the interest rate is horrible. If you don't have the right insurance for example, you risk losing your deposit if the car is written off, as the lease simply ends.

At Toyota you can put multiple security deposits down that in fact will lower the interest rate and thus reduce your monthly payments. I would pour the $3000 into that instead of a down payment.
Member
Dec 27, 2006
456 posts
230 upvotes
Canada
ncnmra wrote: This is total BS....assuming that he actually said that, in those exact words, it is a total lie. I would suggest to him to drop another $1000 off the price of the car and you will forget about his lies and illegal behavior, and when he scorns, tell him to pound salt. Leave a bad Google review, and go somewhere else. BY NO MEANS should you reward this shitty behavior.

Car has full MFG warranty for 2 years. Its not even technically your car. Every time they tried to up-sell me on warranty/protection/undercoating on a lease, I just say "well, it's your car, so if you think it is necessary, YOU pay for it". They quickly change tactics afterwards.
I hope you understand that after you sign the lease contract, it's not the dealer's car anymore, it's TFS'. So your argument doesn't make much sense.

Top