Customers often want to quit the lease term due to various reasons. If you’re going to get out of your lease term early, you have a few options available at your disposal. Early lease termination has various aspects that you should know before opting for this method. Other alternatives are lease buyout or lease transfer. However, we will focus on early lease termination in this post and discuss all you know about this method. Keep reading this post till the end to learn more!
What is early lease termination?
Early lease termination refers to the process of withdrawing from your lease agreement with your leasing company. If the company provides this option, you can quit the lease agreement and be released from paying the remaining installments. However, it is not good on financial grounds as you must pay the due balance and other associated costs to the company.
Early lease termination often penalizes the customer due to breaching the company policy and code. Moreover, the company also requires you to disclose the termination reasons in the agreement.
What happens when you terminate early?
Customers may want to quit the agreement for various reasons, and if you are going to do the same, you should know what will happen. Once you disclose your intentions to the leasing company, they will take a few steps. These are:
i) Early termination fee:
The first the leasing company will do is to charge the early termination fee on your termination decision. The amount is usually the difference between the remaining balance owed on the lease and the credit your receive. It is done based on the calculations in your lease agreement.
ii) Vehicle disposal fee:
Once you are done with the termination charges, the next thing the company can ask is the vehicle disposal fee. It will also include transfer fees and other associated taxes with the processes. Terminating your lease is not a wise decision on financial grounds, and you must watch out for these factors before taking the initiative.
Leasing a car has been an affordable and enticing option for people. Since it is easier on budget, most people are jumping into it. Do you want to lease your dream car on easy terms and conditions? Consider contacting monthly car lease Dubai companies!
Common reasons for early termination:
There could be various reasons for the early termination of a vehicle lease. However, the customers are bound to disclose them in the papers, whatever the reasons. Here are a few reasons why people often opt for early termination.
i) Declined market value of the car:
People tend to quit the agreement when the market value of a leased vehicle declines more quickly in the beginning than at the end of the lease. You will pay the depreciation cost initially, but what if the car does not depreciate at that amount? Once you have terminated the deal, there will be a shortfall in the depreciation price.
ii) Personal reasons:
Apart from depreciation or declined vehicle market value, a customer may quit the lease agreement for family reasons. What if someone shifts from one place to another? Or a migration to another country does not define the terms; hence, the lease agreement must be terminated.
Options at voluntary early termination:
A voluntary early termination can bring you three options that you can choose from. These are explained in the coming lines.
i) Return the vehicle:
the first option you can choose is to return the leased car to the lessor and pay the early termination charges. It will put an end to the agreement between you and the leasing company. To make it simpler, it is what we have explained so far about the early termination. You quit the deal and make all the payments and penalties for clearing your name off the records.
ii) Transfer your lease:
Transferring your lease is another option that you can choose if you want to quit the agreement. The new lessee will take your place to continue using the vehicle and keep paying the remaining installments.
Transferring your lease may not cost you as much as the first option since another person will continue your lease. Do you want to lease a car for a month to cater to your business needs? Consider contacting monthly car lease Dubai companies!
iii) Lease buyout:
The last option is to end the lease and purchase the vehicle outright. There are still some charges involved, but buying the car will put you in a better financial position. Most people often neglect this point, but it has long-term benefits.
Lease your dream car today!
Purchasing your dream car could be out of budget, but what if you decide to lease it? Car leasing companies can provide you with various models on lease with flexible terms and conditions to enjoy your ride. Consider contacting these companies and start your journey with fresh wheels!