Take Over Lease

[desmond]

It is my first time to have a car. I heard of taking over somenone else's lease can be more affordable. May i know the precautions and what to watch out for?
Thanks

[93mr2gt]

make sure no damages on car, because when you return it after lease, you are responsible for the reapirs, make sure kms in line with lease contract, or you will be penalized for overage, find out residual of lease and add all the payments up, then you will know how much you are actually buying the car for, sometimes some people put down a security deposit in the beginning, find out if theres any, other than that, i cant think of anything else ATM

[bulaian]

Make sure you understand the outline of the lease. Payments, km allotment, residual value etc.

[TomcoPDR]

Originally posted by 93mr2gt
make sure no damages on car, because when you return it after lease, you are responsible for the reapirs, make sure kms in line with lease contract, or you will be penalized for overage, find out residual of lease and add all the payments up, then you will know how much you are actually buying the car for, sometimes some people put down a security deposit in the beginning, find out if theres any, other than that, i cant think of anything else ATM

Lots of good points here...

And to add for OP, make sure it'll be agreed upon what kind of kilometers at HAND-OVER... I have had a case where I took over someone's lease on a truck (he said he was moving from Cgy to Sask)... At the time of viewing, it was 24,000 km (ok so another 15 months, I can do)... BUT by the time the paperwork got done, he drove it till 35,000km... (Didn't tell me anything, etc... so within the 2 weeks of paperwork, he must had made his trips moving to Sask)... What a sneek.

Some manufacturers, because you're paying for lease transfer fee $400-500 , you can just ask the current lease holder to drop the car off at a dealership, and let the dealership do the paperwork. (I've done that too, after that experience... so the vehicle is in the dealership's possession)

Good luck

[bspot]

Make sure they are giving you some cash to take over the lease.

A car depriciates more the closer it is to being new.

When you take a lease you are paying the depreciation.

Say a guy leases a $20,000 car for 4 years.

The car manufacturer estimates that car will be worth $10,000 at the end of the lease.

The leaser has to pay $2,500/year in depreciation, plus interest. This happens over even payments.

The car after year 1 of leasing will not be worth $17,500, as it is depreciating faster at this point.

Say it's worth $16,000 after the first year when you take over the lease.

The person you are taking over from should be paying you $1500 cash to take it over, or else you are doing them a huge favor and screwing yourself.

[Danny Meehan]

Give us the details of the lease and we can give you an accurate evaluation

[desmond]

Originally posted by Danny Meehan
Give us the details of the lease and we can give you an accurate evaluation

Thanks. Im still shopping around for a take over lease and wondering if it is a good idea than buying a used car. No specific target yet.
Thanks

[Aleks]

Originally posted by bspot
Make sure they are giving you some cash to take over the lease.

A car depriciates more the closer it is to being new.

When you take a lease you are paying the depreciation.

Say a guy leases a $20,000 car for 4 years.

The car manufacturer estimates that car will be worth $10,000 at the end of the lease.

The leaser has to pay $2,500/year in depreciation, plus interest. This happens over even payments.

The car after year 1 of leasing will not be worth $17,500, as it is depreciating faster at this point.

Say it's worth $16,000 after the first year when you take over the lease.

The person you are taking over from should be paying you $1500 cash to take it over, or else you are doing them a huge favor and screwing yourself.

Last two cars I had people take over my leases after just 6 months and I gave neither of them any money. It all depends on what kind of car it is too. Can't do that with most makes.

[you&me]

Originally posted by desmond


Thanks. Im still shopping around for a take over lease and wondering if it is a good idea than buying a used car. No specific target yet.
Thanks

Keep in mind that most offer a lease take over because the car is "under water" on an open end lease (meaning you have to buy it out at the end). If there's equity in it, the owner/leasee would just be able to sell it and pay out the lease.

For example - http://www.leasebusters.com/en/details.asp?ID=126596

$0 down
$400 / month for the remaining 30 months
$22,000 residual, open ended

All that equals $34,000... If the car is worth more, it's a good deal for a take over, but the owner/leasee would more likely just list it for sale (for $34k+) and then pay off the lease.

If the car is worth less, then the leasee is just dumping their problem on someone else.