An auto least takeover is when a lease seller wishes to get out of their lease sooner. They generally look for an individual who is willing to take over the lease contract along with the vehicle. The lease purchaser will inherit the pre-existent conditions of the lease and of course, the car. A lease takeover may be your cheapest option, depending on the state of the car, the leasing contract, and the terms of the lease.
Chief Elements of a Lease Takeover:
- Terms – the term of the leasing contract with the existing lender. As a lease “buyer,” you’ll be inheriting whatever period is left of the term of the original lease.
- Residual value – this the value that the car will be at the end of the term. The leasing company has preordained this value when the car was still brand new. This amount is what you’ll need to pay when the term comes to an end if you wish to keep the vehicle. It is essential for a lease buyer to familiarize them with what every driver in Canada should know about a car lease takeover before taking such a big step. Make sure the contract makes provision for you to either purchase it or return it.
- Market value – this is generally the private resale value of the car. It may be lower or higher than the residual value.
- Transfer fee – There may be additional fees about transferring a lease from the lease-seller to the buyer.
- Kilometer limits – every vehicle lease comes with a limit of kilometers driven, which is allowed by the end of the term, divided yearly. It ranges from twenty to twenty-five thousand kilometers annually, on average.
- Wear and tear – this is referring to the amount of deterioration or damage the vehicle leasing agency ruminates to be normal when the term comes to an end. You’ll be required to pay for any repairs that fall out of the “normal” limit. That’s why you need to study the lease contract thoroughly.
Advantages of a Vehicle Lease Takeover
- Start-up costs – there’s no need for you to make a down payment, and the start-up fees are lower with a lease takeover.
- Lower monthly premiums – the monthly premiums are less than the large monthly payments with a car loan. With a lease, you are only required to pay for the length of time you are driving it.
- Lease incentives – lease sellers, may provide additional incentives to the lease-buyer.
- Market versus residual value – in case of the care ending up with higher market value than the residual value when the lease ends, you may be able to sell the vehicle at a profit after you’ve bought it out at the end of the term.
Risks of a Vehicle Lease Takeover
You must always review the lease terms carefully when you’re considering a lease takeover as there may be additional expenses which were incurred by the previous lessee:
- Wear and tear limits
- Kilometre restrictions
- Lease transfer fees and turn-in fees