Lease buy-back must comply with the conditions specified in the contract. Depending on the type of lease, the leasing contract does not always allow the customer to make an early buy-back. However, it does appear to be possible in the case of residual value leasing. By buying back your leased vehicle early, you become the owner of the car and terminate the leasing contract. How do I do this ? Here’s how.
Early redemption of a lease with residual price
Leasing with residual price is a car financing method based on the idea of renting. When you lease a car, you are simply the lessee. The vehicle remains the property of the leasing company for the duration of the lease. Car leasing involves a finance company that buys the vehicle from a dealer and then, via the vehicle supplier, issues a financed leasing contract to the customer. As a result, most car leasing contracts will be based on the Swiss Federal Law on Consumer Credit (LCC). This means that the lessee cannot interrupt the leasing contract for any reason whatsoever without incurring early termination penalties. There are various ways to get out of a car lease without being penalized financially. In the case of early repayment of the lease, the lessee will have to proceed with the buy-back to free himself from the lease and terminate the contract.
Two ways to buy out a lease early
In most cases, it’s the lessee who buys back his or her lease when he or she can afford to pay the lease buy-back amount. Once the lease has been repaid, the lessee has full ownership of the car, which means that the lease is terminated and the lessee is no longer bound by the terms of the contract he or she signed earlier.
Occasionally, the lessee may find a buyer for his leasing contract who wishes to take over ownership of the vehicle, rather than simply taking over the leasing. In this case, the purchaser will have the option of buying out the lessee’s lease. No solvency conditions are required in this case, as long as the purchaser is able to pay the full amount due for the sale of the leased vehicle. The original lessee, on the other hand, is simply released from the leasing contract.
What is the procedure for early repayment a lease ?
Would you like to become the owner of your vehicle, or would you like to sell your leased car ? The first step is to check whether the operation is possible by consulting the clauses of the leasing contract. Generally speaking, there will be a clause giving the lessee the option of buying back the lease after the 3rd month of the contract, as well as an amortization table showing the residual value of the vehicle at the time you wish to buy it back. Please note: This table does not indicate at what price the vehicle can be bought back before the end of the lease. Without this clause, you will have to wait until the end of the leasing period. That’s why it’s important to read the leasing conditions carefully before signing. Once you’re sure you have the right to buy out the lease before the end of the contract, you’ll need to contact the leasing company that owns the vehicle to find out how much it will cost to buy out the lease. Some leasing companies may apply prepayment charges : These may be linked to outstanding monthly payments, late payment penalties, etc.
Impossibility of early redemption of the leasing : What to do ?
If early payment of the lease is not provided for in the contract, there is a way to get rid of your car lease without becoming the owner of the vehicle. Lease transfer is a solution authorized by leasing companies under certain conditions. Lease transfer involves finding a buyer for your leasing contract. The buyer will continue the leasing contract in your place, subject to the same conditions. You need to find a buyer by placing an ad on Switzerland’s leading car leasing transfer and buyback platform, specifying the description of the leased vehicle, the term of the contract, the monthly payments and the finance company. To validate the transfer, the leasing company will check the creditworthiness of the new lessee, and if the transfer is approved, the new lessee will have to pay the transfer fee, which averages between CHF 300 and 600, depending on the leasing company. As for you, you will be permanently disengaged from car leasing.
