Why take over a lease? In short, you get an almost new car at a great price. But what happens if you don’t pay attention to the terms and hidden fees? Here we’ll tackle your most asked questions and give you the pros and cons of taking over a lease in Canada.
If you’re looking to get out of your current lease, scroll down to learn how it’s done.
Simply put, a lease takeover refers to transferring the leasing contract from the current owner to the new buyer. The current owner is looking to get out of their lease early and the new buyer agrees to take over the vehicles pre-existing contract and the vehicle.
If this sounds too good to be true, don’t be alarmed. Drivers want to get out of their leases for hundreds of different reasons: losing a job, moving out of the country, getting divorced, getting a company vehicle, etc.
Remember, by choosing to go the leasing route, you’re saving on upfront fees commonly associated with a new lease (approximately $1000 to $4000) and choosing to drive the car for a shorter period of time (common leases are between 24 and 60 months). Lease takeovers are also a great idea for those looking to buy out a pricey vehicle at the end of the term, as the original buyer has already contributed most of the payments in advance.
If you’re unsure of what you should be looking out for in your contract, keep reading.
In an ideal world, the terms of the lease and monthly payments are laid out for you as soon as you start your search. However, with owners putting up cash incentives to make you overlook the condition of the vehicle and prices being scattered around, the search can quickly become confusing.
Here is what you’re getting yourself into:
The length of the leasing period. As the buyer, you will take over the vehicle and the original contract. Once the term runs out, you will either return the vehicle back to the dealership or decided to purchase the vehicle for a fixed cost (residual value will be on your contract). Remember, the original buyer no longer has any ties to your contract, meaning any damage or kilometre overages will be coming out of your own pocket.
This is the value of your car at the end of the term. If you choose to buy out your vehicle, this number coincides with the price that you’ll have to pay to keep your vehicle. If this is the route you’ve chosen, make sure to ask the dealership if this is a viable choice with your contract.
This is the private resale value of your car and may differ from your residual value. Using a website such as Edmunds of Kelley Blue Book will help you determine the fair market value of your vehicle to see if it’s worth purchasing at the end of your lease.
This refers to the extra fee associated with transferring the lease under your name. This fee is often split equally between you and the seller or paid for entirely as an incentive for you to take over the lease.
Every lease contract specifies a kilometre limit for the term of your vehicle. This number is then divided annually and most often ranges between 20-24,000km a year. Unless you’ve budgeted to keep the car beyond its lease term, this is an important term to consider, as each additional kilometre can cost you upwards of 20 cents! Reflect on your driving habits ahead of time to make sure that you’re not penalized for the seller’s overages when the lease comes due.
Wear and Tear
Refers to how much car damage has been sustained throughout the term. If the vehicle does not come with an appropriate warranty, you will be required to pay for the repairs out of your own pocket. Make sure to inspect the vehicle thoroughly or the repairs will be coming out of your own pocket.
In some instances, leasing companies may charge you for unpaid parking tickets. This is why it’s important to obtain a car’s history for any evidence of accidents or violations.
Taking over a lease is a great choice for a number of reasons.
Initial costs such as down payments and initial dealership fees are waved. This is a great verdict as downpayment are used to reduce monthly payments. Meaning you get a fairly new vehicle and lower monthly payments with $0 down.
No Negotiating with Salesmen
That’s right. You’re signing up for a pre-arranged contract, meaning all you have to do is sign over the necessary documents and drive away.
Sellers may offer extra cash to take over their vehicle. This can be to incentivize you with a few free monthly payments or to distract you from potential vehicle damage. Always make sure to do a thorough inspection before agreeing to the terms.
This is a great way to purchase the vehicle you want at a lower price point. Since a majority of the vehicle has been paid off for by the seller, all you have remaining are the short term payments you’ve agreed to and the residual value. The final payment is often a lot lower than going through the dealership process.
Websites such as leasebusters.com are a great way to get out of your car lease for a fee. Another way to break your lease is by purchasing a new vehicle.
Well, the dealer appraises your current car and deducts the number from your residual value. The remaining number is then added to the cost of your new vehicle.
For example, let’s assume your current car is appraised at $10,000 by the dealership, while a payment of $15,000 is still remaining. This means that $5,000 will be broken down monthly or bi-weekly and added to your new vehicles payment amount. Waiting until your residual value and market value are close is a great way to save some money.
If you’re ready to break your lease, we’d be happy to help. With over 17,000 vehicle options across Canada, we’re confident that we can get you into a better car at a reasonable price. Our online application only takes 60 seconds to complete and gives you access to: personalized vehicle options in your area, free delivery nationwide, $0 down options and no obligations!
Let us help you break your lease:
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