Good financial situation is key factor for any mortgage seeker, especially in BC real estate. Automobile is usually the second biggest investment after your home, so having a car leasing properly planned is important. If you ever needed to acquire a car, you may have learned that leasing a car is in many ways superior to buying it. Few of us have the funds to afford the full price of a car, and so we are left with two financing options – a consumer loan from a bank or a credit union, or a lease contract with the dealer.
In the former case, you are becoming the owner of the car right away, with all the rights and all the obligations stemming from your ownership. The downside of ownership is that you are responsible for all damages, repairs and care for your car. Plus, the loan repayments will likely exceed your regular leasing fees. On the other hand, leasing is effectively outsourcing or “permanent” car rental if you will. It is a service, and the fee for this service tends to be smaller than the cost of ownership.
There may be times, however, when the lease contract may prove a burden to your cash flows and you may be forced to forgo and return your car prematurely. Hasty contract terminations may reflect very badly on your credit record and may thus make your cost of borrowing higher for a while. In other words, you cannot simply return your car to the dealer and quit paying the lease. Fortunately, there are several ways which may prevent you from ruining your financial image, although they may require a little more effort and time on your part.
One way out is most probably stipulated in your lease agreement. It is usually a clause called “early termination” and it lays out the conditions under which you may withdraw from the contract. These conditions will not only require you to pay up your outstanding fees, but will specify fines and penalties for your early withdrawal. These are meant to cover the dealer’s costs with re-leasing or selling your car or, in other words, recovering the cost of lost business.
Rather than early termination, you may try to sell your car to a third party. The buyer will effectively buy the car out from the dealer for you and drive home in it. If the sale price of your car is high enough, you may even make a profit on this transactions, unless the early buyout penalty eats all of the surplus. If the car’s price is too low, though, you will have to make up for the difference between the sale price and the buyout price from your own pocket. Whereas this way may cost you less than early termination, it will definitely require active approach on your part, especially in terms of locating the buyer for your vehicle.
There is another option for you, though; one that is more profound than the two listed above, but potentially somewhat more complicated legally. A procedure called “lease transfer” involves passing on your remaining obligations and rights onto a creditworthy third party. This transfer has no effect on the dealer/lessor, especially if the creditworthiness of the new lessee is higher than your own. If you manage to perform an effective lease transfer, you may avoid most of the fees, fines and penalties which would normally stem from your contract.
If you need more information or guidance with lease transfer, there are several web portals specializing in this market. For a fee, some of these services will not only describe for you the process of lease transfer in fine detail, but also help you easily find those interested in taking over your lease. The databases of online portals may arguably be larger and more flexible than those of brick-and-mortar lease agents. This fact might facilitate the process of your lease transfer.