Automobile Lease Forms
Auto leasing is growing in popularity in the United States because of the increasing price of cars. Therefore, it is important to understand how leasing works. Leasing works in a way similar to renting. In an auto lease, a motor vehicle is contracted to be used for a particular period of time by paying adequate compensation. Auto leasing saves large businesses from spending huge amounts on buying vehicles for their business needs. Usually, automobiles are leased for a term of two to four years.
Whether to Lease or Buy
People often get confused whether to lease or buy a car. In a lease vs buy option, some experts suggest that it is safer to lease a car than buying one. In the modern world, car buying is possible only if a person has a pool of money or by applying for a vehicle loan. When you buy a car through an auto loan, a huge sum has to be paid as down payment and the remaining amount should be covered by regular monthly payments, which would generally be bigger than what you pay for a new car lease.
Choosing a Car Lease
Car leases are generally of two types: closed-end lease and open-end lease. In closed-end lease, you can return the car to the lessor at the end of the lease term without paying any extra charges, provided you did not exceed the mileage allowance, the car did not experience any unnecessary wear and tear, or there is no other damage. Monthly lease payment will be higher in a closed-end lease. It may also attract extra finance charges since the lessors take all the risks. In an open-end lease, end of lease obligations are determined only at the end of the lease. The extra amount to be paid will be determined according to fair market value of the vehicle at that time. However, the monthly payments will be lesser because the lessee takes all the risks. In this type, excess wear and tear out of a lease is left to arbitrary determination.
There are also single payment lease and multiple payment leases. In single payment lease, you can pay the total amount for the lease term up front. This way, you will be free from monthly payment hassles. In multiple payment leases, the lease payments have to be paid in regular installments every month.
In a car lease, you will not gain immediate ownership of the vehicle. When you buy a car, ownership is assumed at the time of signing the contract. However, the title is not passed on until you fully repay the loan. When you deliver the vehicle to the dealer after completing the term of lease, he may charge you a disposition fee. Disposition fee is the amount that you have to pay the dealer in order to take the vehicle back into his inventory, or to prepare it for a second sale. However, if you decide to purchase the vehicle, the disposition fee may be waived.
Selecting the best lease deal, a leasing company, or signing a lease contract can be a challenging job. There are a lot of things that you have to understand and accept before entering into a lease agreement. Leasing is the best option if you wish to use a car for only five or six years. Similarly, if you are in a position to trade cars with a loan balance, you should be familiar with auto leasing, and how to lease. If you are finding it hard to repay the lease amount, there are agencies that will help to take over your lease. Even, the primary leasing company may assist you in an auto lease transfer. An auto lease dealer may charge you an exorbitant fee for early closure or cancellation of lease. In such circumstances, it is always better to look out for people who are ready to assume a car lease. By assuming a car lease, one can save a great deal of money. Since much of the term of lease would have been used up and the initial expenses paid up, people who assume an auto lease are sure to benefit. Due to the current economic downturn, used car leasing is also increasing.
Nowadays, you can check for best the lease deals and lease specials over the internet. Some websites provide a lease calculator by which you can have a better idea of the average amount that you will have to pay in order to lease a particular brand of vehicle.
Auto Lease FAQ
I need a car for my business. Should I buy or lease?
To decide over the lease vs buy option is often confusing. Some experts are of the opinion that leasing is better than buying. Car buying is possible only through direct purchase or an auto loan. A vehicle loan has tough legal formalities and you will have to make a huge down payment. Regular payments have to be made each month if you lease or buy a vehicle. The difference is that you will have the ownership of the vehicle when you buy. Nowadays, car leases or auto leasing is very common. By leasing an automobile, you can save money for other business needs. Besides, if you do not like the model/make of the vehicle, you have the option of choosing something else.
What should I pay every month for an auto lease?
The monthly payment amount will vary according to the brand and type of vehicle you wish to lease. Rent amount is calculated at the beginning of the lease and will be set out in the lease contract. It is calculated after considering the capital cost of the vehicle, its residual value and term of lease. There are various websites that provide good lease deals and lease specials. They even provide a lease calculator which helps you to understand the monthly amounts payable on a new car lease.
How can I get a lease with a lower rate of interest?
You can lease an automobile at a lower rate of interest by choosing an open- end lease. An open- end lease has lower monthly lease payments. In this type of lease, costs for extra mileage, wear and tear or other damages will be determined at the end of the lease term in accordance to the vehicle's fair market value. An open- end lease has lower monthly payments because the risk is borne by the lessee. The additional wear and tear arising out of a lease is subject to arbitrary determination. Before signing a lease deal, you should possess sufficient knowledge about how leasing works and how to lease.
Can I pay my lease amount upfront?
When you lease a car, you can pay the total lease amount at the beginning of the lease. This is called single payment lease or pre- paid lease. The lease amount will be determined in accordance to the fair market value of the vehicle. In single-payment lease, no monthly installments have to be paid. By opting to this type of lease you can avoid paying interest on the vehicle's depreciation portion.
Can I cancel my auto lease any time?
An auto lease may be canceled at any time during the lease period. However, early termination of the lease may attract additional finance charges. Auto lease companies may have fixed termination fees. Please read through your lease agreement carefully for such clauses.
Why do I have to pay extra money after closing my auto lease?
Sometimes, the dealer may charge a disposition fee when you return the vehicle. It is the amount charged for taking the vehicle back into the dealer's inventory. This amount will be used by the dealer to prepare it for second sale and get the best price. This disposition fee can be waived if you decide to purchase the vehicle.
Can I transfer my lease to another person?
Auto lease transfer is possible if you are finding it difficult to make regular monthly lease payments. Your leasing company may assist in finding people who are ready to assume a car lease. The person assuming the lease will benefit much because the initial expenses would have been paid and most of the lease term would have been used up. There are individuals as well as professional agencies to help take over your lease. Used car leasing is growing considerably because of the current economic downturn.