Avoid Extra Costs At The End Of Your Lease September 20, 2008
Posted by janey in : loan amortization , trackbackWhen your lease is up, you can simply turn in the keys and lease another car or buy a new one. But how about getting out before the lease ends? Maybe you cant afford the sky-high payments on that silky Jaguar JX V6 model anymore or youve just had a baby and you need a larger and more spacious vehicle?
Unfortunately getting out of a lease is not as easy as getting in! A leasing contract is difficult and expensive to terminate early. Simply turning in the keys and walking away from a lease can result in stiff penalties. You credit could be ruined and you could even get sued for breach of contract.
How to get out of a lease before your contract expires
Its not all doom and gloom though. Actually, there is a number of options available to you. You can sell the car yourself and pay off the bank. This can be cost effective if the market value of the car is close to the buy-out number. Do not hesitate to exercise this option even at a loss if it happens to be lower than the termination fee. Your best option, though, is to transfer your lease for someone who would assume it and take it off your hands. There is a whole set of potential buyers looking for short-term leases without all the hassle and extra costs. Check with family and friends or use the services of lease- assumption websites, like swapalease.com, to list your car. Make sure you check the credit worthiness of the new lessee and provide the car in good condition.
$250 to dispose of your vehicle, $1000 for extra miles you put on the clock and $200 to replace the light bulb and the worn tyreslease agents constantly nickel-and-dime consumers when their lease runs out. Heres a rundown of what can trigger those fees, and some steps to take in self-defense.
About Leasing
Disposition fee: leasing companies charge you if you choose not to buy the vehicle at the end of your lease. This fee is set as compensation for the expenses of selling, or otherwise disposing of the vehicle. It typically includes administrative charges; the dealers cost to prepare the car for resale and any other penalties. Make sure this fee is stated clearly in the contract and is agreeable by you before signing on the dotted line. At lease-end, you are left in no position to negotiate as the dealer can apply your refundable security deposit towards this fee.
Excess mileage charges: Almost all leasing companies will charge a premium for each mile over the agreed upon mileage stated in your contract. This penalty can be as high as 25 cents per mile and can add up quickly. To avoid the risk of running thousands of dollars in excess mileage penalties at the end of your lease, always check the per mile charges in your contract and be realistic about your mileage before you sign any contract. If you think the limit is unrealistic given your commutation needs, then negotiate with the dealer to get a higher mileage or contract for additional miles.
Leasing Info
Excess tear-and-wear charges: Another potential cost at the end of the lease is any incidental damage done to the car during the lease. This is deemed any excessive damage done to the normal tear and wear of the vehicle. Notice the use of the terms deemed, excessive and normal. There is no standard formula to define whats excessive and normal and its up to the leasing company to assess or deem the damage and determine what they are going to charge. This leaves you at the mercy of unscrupulous leasing agents who set stringent tear-and-wear standards. Make sure you read the description of these standards, understand them and agree to them. If your leased vehicle is damaged prior to the end of the lease, you may find it cheaper to repair the damage yourself than pay the excessive charges of the leasing agent. In the event of a dispute over the charges at the end of your lease, get an independent third party to do a professional appraisal detailing the amount required to repair any damaged parts or the amount by which tear-and-wear reduces the value of the vehicle.
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