Oct 20, 2020
What You Need To Know About Car Lease Takeovers
Time for a new vehicle? One of the first questions you will get asked by a car salesperson is whether you want to lease or finance.
Leasing has become the preferred choice. Its estimated that about 70% of Canadians lease today. Cars are typically leased for a minimum of two years. Some lease agreements can be for 5 years or more. But what happens if you want to end their lease early? Perhaps you need a bigger or smaller vehicle. Maybe you’ve decided you no longer want to drive, or it doesn’t make financial sense. You have a couple options to consider.
You can roll your current lease costs into a new lease or buyout your current lease. Both will cost you a decent chunk of change. Or, you can do a lease takeover. Here we’ll discuss what a lease takeover is, advantages, disadvantages, and answer common questions.
What Is A Lease Takeover?
A lease takeover, or transfer, involves the transfer of a lease from the original leasee to another person. The new person takes over the current lease contract and vehicle for the remaining term of the lease.
People who are currently leasing a vehicle may consider a lease transfer because of changing family situations or other financial situations. A transfer can also be cheaper than returning a vehicle while still in the lease agreement.
How Does A Lease Takeover Work In Ontario?
A lease takeover requires that you find a friend, family member or individual who might be interested in the lease. You can post an ad in a newspaper or online seeking out someone to takeover your lease.
Once you find someone to take over the lease, you will need to connect them to the finance company that holds the lease. They will run a credit check to make sure the person can responsibly take over the lease. Paperwork is signed, transferred, and the new owner will set-up new plates.
When the lease transferred to someone else, you will no longer need to worry about monthly payments associated with the vehicle – the person who took over the lease will be making payments for the duration of the original agreement. The new leaser will be responsible for returning the vehicle in satisfactory condition and within the set number of kilometres.
For example, let’s say you had a 5 year vehicle lease. Your monthly payments were $500. You have 24 months left on your lease. When you find someone to takeover your lease, they will get your vehicle, take on the $500 monthly payments for the remaining 24 months on the lease.
If you are considering a lease transfer, speak with your dealer or financial agency to learn about options and associated fees.
Pros And Cons To A Lease Transfer
It is important to understand the terms of the original lease. There might be limitations to a lease transfer and financial options. Here are the pros and cons to a vehicle lease takeover.Pros
- Lower monthly payments : When a vehicle is being leased, the owner is paying only for the depreciation of the vehicle.
- No down payment : Lease takeovers will not require a down payment which can ease the start-up cost of having a vehicle.
- Vehicle maintenance : Leased vehicles tend to be better maintained and have lower kilometres than buying a used vehicle.
- Short-term commitment : Some drivers like to switch their vehicles often for short-term leases.
- Transfer and turn-in fees : In the lease contract, there will be costs for turn-in fees and lease transfer fees. Taxes can also increase the amount needed to transfer.
- Kilometre limits : Make sure the vehicle has less mileage on it than the yearly limit. As a buyer, you want to ensure there are enough kilometres left on the car until the end of the term.
- Wear and tear : Vehicles with extensive wear and tear should be avoided, as the buyer of the lease takeover will need to pay for repairs.
- Hidden repairs : Undetected problems or mechanical issues can be costly.
What Are The Risks Of Taking Over A Lease?
Taking over a lease transfer can save you money. You just need to find the right vehicle with the right lease terms. You also need to fully understand the risks and fees with taking over a lease :Lease transfer fee
Many vehicle leases have a fee to transfer a lease to another driver. This fee can range between $300 to $800. The good news, is most people who are looking to get rid of a lease will take on this cost.Monthly payment
When you do a lease takeover, you inherit the monthly payment as is. You cannot negotiate a change to the payments.Limited mileage
Always check the number of kilometres on the vehicle and how many are left as per the original lease agreement. If you go over the kilometre limit, you will be required to pay for any additional kilometres used. Depending on the lease agreement, kilometres can cost 10 cents to 25 cents per kilometre or more.Repairs and wear and tear
Ideally, if you are taking over a leased vehicle it should be in immaculate condition. If a vehicle needs repairs, has been in an accident, or interior faults, you are responsible to fix any excessive wear and tear. Always ask for a service record and vehicle history report. You are the one responsible for returning to vehicle at the end of the lease.
Where Can I Find A Vehicle Lease Takeover?
Lease Takeover FAQs
Here are the most frequently asked questions about transferring a car lease :
The decision to buy or lease a vehicle does not affect your insurance premium, but it can affect your credit score. When thinking about taking over a lease, you need to consider the vehicle, its features as well as your insurance history. A lease takeover will not affect car insurance, but the vehicle type will.
A lease takeover in Canada can cost between $300 and $500. The cost and terms will be outlined in the original lease agreement.
Yes. Ending a lease agreement early can be expensive. If you are looking to end a car lease, you can consider a lease takeover, buying out the vehicle or looking into another lease. All these options come with various fees – make sure you do your research and fully understand your lease agreement.
For some drivers, a leased vehicle can cause challenges when faced with changes in finances and family situations. Setting up a lease takeover can save the owner fees of selling the car back to a dealership or buying out the car. For someone looking to lease a vehicle short-term, taking over a lease can be a cost-effective way to get a new vehicle.
Make Sure A Lease Takeover Is The Right Choice For You
A lease takeover is a good option to get a new vehicle at a lower monthly price or for the short term. From a sellers perspective, its an effective option to get out of a current lease agreement and fee up finances. Weigh your options and make sure a lease takeover is the right decision for you before you move forward with the agreement.
Here Are Some Other Articles You May Be Interested InLease Vs Finance – Is Leasing Or Buying A Car Better?
Average KMs Per Year By Canadian Drivers
Reporting An Accident In Ontario
A Simple To Follow Guide For How To Buy A Used Car
<<At Fault Accidents In Ontario And Their Impact On InsuranceCar Maintenance Tips 101>>