There are some definite advantages to leasing a vehicle. Monthly payments are generally lower and you can drive a much more expensive vehicle for the same monthly payment you would be making on a car loan. When you lease vehicles, you’re always driving a newer vehicle. You’re rarely faced with an expensive repair bill because the vehicles you drive are always under warranty. And, if you choose not to buy the car out at the end of the lease, you simply return it to the dealership and walk away.
Breaking a Lease is Expensive
If you break your car lease there are penalties that can end up costing you thousands of dollars. Rather than paying early termination penalties, a growing number of people who lease vehicles choose the option of transferring their leases to other drivers. This can be done privately on sites like Craigslist or Kijiji, or through companies that specialize in matching up lessees with people who are willing to take over a car lease. This can be a real boon for people who want to get a great deal on a newer vehicle.
Advantages of taking over a Vehicle Lease
Picture this. Someone has been leasing a vehicle for two years and there are two years left on their lease. They’re going through a divorce and they need to get rid of their leased car. Rather than break the lease and pay a huge penalty, they post it on Craigslist and offer a cash incentive of $2000 to take the lease over. You come along, they hand you a cheque for $2000, and you agree to make the lease payments for the next 24 months. Your financial commitment is shorter and at the end of the lease period you either return the car, or you pay the residual and keep it. Either way, you win.
If there was a minimum down payment at the start of the car lease, the original lessee paid it. You have $2000 cash in your pocket. If at the end of the lease period the car is worth more than the residual, you can buy it out and possibly sell it for a profit after making payments for just a couple of years.
Some people look at assuming an auto lease as a great way to take a vehicle that they might be interested in buying for an extended test drive. At the end of the lease, if they like the vehicle, they may decide to keep it or buy a new one. Taking over a lease can also be a good option for someone who is being transferred for a short time. Rather than buying a vehicle, they take over a lease for a year or two.
If you like to change vehicles frequently, picking up a vehicle that’s nearing the end of its lease can be a great option. If you’re looking for a specific vehicle that’s less than two years old, your choices might be severely limited on the car lots. However, you might be able to find one that’s available as a lease return.
The Pitfalls of taking over a Car Lease
Of course, there are pitfalls to be aware of if you are considering taking over a car lease. A leased vehicle must be returned in the condition it was in when new with normal wear and tear. If it’s not, you could be on the hook for expensive repairs. It’s a good idea to have a leased vehicle inspected to ensure that there isn’t hidden damage that could negate all of your savings.
Also, the incentive being offered might seem like a great deal, but if the lease rate was high to begin with and current lease rates are much lower you might be better off leasing a brand new vehicle.
Do your due Diligence
Before taking over a lease, ask to see all of the service records to make sure that the vehicle has been maintained properly. You can also pay for a vehicle history report to ensure that it hasn’t been in an accident or had the odometer rolled back. Speaking of odometers, make sure that there isn’t too much mileage on the vehicle. All leases specify mileage limits. If a leased vehicle is two years old and has high mileage and you drive a lot it might not be a good choice for you. If you exceed the maximum allowed mileage you could incur a hefty penalty when you return the vehicle at the end of the lease.
Also be aware that when you take over a lease, there may be transfer fees involved. Don’t forget to add them to your calculations. However, sometimes a seller will assume those fees if they’re anxious to get out of the lease. Of course, you’ll also check over the original lease agreement carefully to ensure that there aren’t any hidden fees or conditions – right?
If you’re thinking about taking over a vehicle lease, talk to Kelowna Nissan first and ask us about our outstanding finance and lease rates.