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Making sense of your car or truck lease agreement definitions, conditions, and terms can hardly ever be identified as a natural accomplishment, especially for most of us who favor reading in plain English. First, buying is not the same as leasing. In reality, it’s almost like a long-term rental. As such, the most important lease terms are in regards to liability, responsibility, and ownership; including lease vehicle insurance, wear and tear, and lease extension or return.
Read More: Buying vs Leasing
Finding insurance for a leased vehicle is the same as insuring any other kind of vehicle. With leasing, however, the terms normally obligate the lessee to have comprehensive auto insurance. To be clear, the leasing company owns the vehicle, the agreement stipulates the rules that allows you to rent it for a set period of time. Normally one of the conditions is full vehicle protection, also known as, full coverage insurance.
The typical lease usually clarifies exactly what qualifies as normal vs excessive vehicle wear and tear. This is very important because when you trade in your leased vehicle you may be charged for wear and damage that falls outside of the agreement. If that makes you uneasy, then be sure to inquire about Excess Wear & Tear Insurance to take the unpredictability out of the thought process.
We advise approaching the dealer you are leasing from before the end of the contract to figure out your end of lease procedures. In addition to completing a lease return inspection, you might also want to request a lease buyout or extension. They allow you to keep your lease for an additional period of time, while the other lets you buy your leased vehicle at current value.
A lease buyout is an option at the end of the lease that permits you to buy your own leased car, truck, or SUV for a predetermined price that is based on a mix of value and the amount you have already paid on the lease.
Of course, you can use your car as a trade. Using the equity from your trade should lower your monthly payment, but it will not alter the total cost of the lease agreement.
Excess wear and tear on a car, truck, or SUV occurs when repairs and/or replacement parts are necessary beyond what is specified in the lease. A few things include missing parts, large dents, aftermarket updates, or engine damage because of a lack of upkeep.
