It happens to the best of us.
Sometimes we get so caught up in the excitement of buying a new vehicle that we put our needs on the backburner, and focus solely on the wants. A few months, or a couple of years down the road, we realize that the new car or new SUV we purchased just isn’t compatible with our lifestyle, and we’re caught up in the urge to send it back.
If you’ve taken out a lease on a vehicle, though, parting ways with your once-beloved Range Rover or BMW isn’t as easy as it sounds. Car leasing involves a financial assessment and strategic payment plan, so when you decide to steer off track with your contract, things can get complicated.
To avoid hefty fines or late payment fees, we’ve outlined five easy steps to transfer your lease, the legal way, before looking into other vehicle purchases.
Live Up To Your End of the Bargain
Just because you’re renting doesn’t mean you can cut corners when it comes to your leasing contract. At the end of the day, as a lessee, you’re expected to abide by your contract between yourself and the leaser. Automotive leasing is a long-term commitment and the original plan is to make your payments until you’ve reached your end of term.
As long as you’re responsible, you should have no problem swapping your lease with another lessee who has agreed to take over your remaining balance. The new lessee will take over the remainder of the original lease, and is therefore responsible for any remaining payments. Ending a lease early using this method is probably the cheapest way out, because only the administrative fees are included in the transaction.
Buy Yourself Out
Buying yourself out of your lease means you’ll have to pay the outstanding balance, the residual value and sometimes the applicable taxes. Sometimes, your vehicle might have earned you equity which means the vehicle is now worth more and you could earn a profit selling it back into the market. But, this isn’t always the case and you should be prepared to pay the balance.
Get a New Lease
One way to terminate your current lease is to swap it with a different lease. However, you will still be locked into an agreement. If you decide to change your lease, you should expect to pay the remaining balance of the first lease and any residual value and accumulated taxes. If the market value for your previously leased vehicle is now lower than what is left to pay on the agreement, the difference will automatically be transferred to the new lease as well.
Return the Vehicle
This sounds quite simple, but economically this isn’t your best option. If you return the vehicle, you won’t have to worry about driving it anymore, but you’ll still have to make your monthly payments--so essentially, you’ll be paying for a vehicle you’re not even driving.
Repossess the Lease
Short-term speaking, this is the option with the lowest associated costs, but long-term speaking, one with the heaviest financial loss. When you choose to repossess, you simply stop making payments and the company you leased your vehicle from recuperates the vehicle, or you bring it back and walk away from everything. In return, the dealership will take whatever means necessary to collect any and all missing payments. We advise to never go this route--your credit score will be badly affected, making it hard for you to take out a future loan or lease, should you need a new vehicle.
At Somerville Auto, you never need to worry about escaping your automotive lease! Our Finance Managers have made leasing a vehicle in Toronto easy and affordable. We take a good, long look at your credit history, and come up with a plan that works for you, not just short-term, but in the long-run as well. We also have the resources available to craft a custom-built automotive lease, and can offer low-buyout automotive leasing for our clients who need it.
Contact us today at 1-(877) 503-5102 or contact our finance experts directly to get started on your credit application.