Since leasing is one of the most prominent alternatives to possessing a car in Canada, more people are now seeking this option. And when it comes to car leasing, there are several factors involved.
Depending on your leasing term, you can decide to terminate your car lease before the lease term expires. This termination can be due to several reasons.
And there are various ways you can choose to use to terminate the lease. A lease transfer is one such way. In this article, we will be discussing lease transfers and how they work in Canada.
Terminating your car lease in Canada is not such an easy task depending on how you choose to go about it.
This is because leasing companies or agencies need to maximize their profit and the only way they can do that is when you make all your payments. This is why there are more penalties when you decide to terminate your lease contract.
You might even be forced to make the remaining payments, which is very expensive. So, when you want to terminate your lease contract, you need to ensure that you do it in the best and most cost-effective way possible. Below are some of the ways you can terminate your lease contract;
- You can return the vehicle and pay the penalties – this is undoubtedly the worst option; hence it is not recommendable.
- You can buy the car and luckily enough, you don’t even have to be the buyer. You can find someone willing to purchase the vehicle.
- You can make a deal with your car dealer to trade the old vehicle for a new one if you have little time left on your lease contract (this is better for people who want a new car and not for people who need to get out of the contract due to financial problems).
- You can hand over your lease to another person who is willing (lease transfer).
Lease Transfer in Canada
A lease transfer is when a lease (in this context, a car) is given to a different person than the current person with the lease. The one who receives the running lease takes over the remaining payments and running costs of the car on the lease contract’s original terms until it expires. There are different reasons for which one may want to do a lease transfer. Some of the reasons are;
- When making payments for a car lease becomes difficult, you can no longer afford to keep up with the cost.
- Relocation – when you are relocating to another province or territory or another country entirely
- When you want a different car for functionality or aesthetic reasons
Whichever reasons you have for wanting to do a lease transfer, you must ensure that it is done the right way.
How a Lease Transfer Works
When you want to do a lease transfer, below are the steps you must take from start to finish:
It is crucial to review your lease contract terms because you may not be allowed to do a lease transfer, depending on your lease type. Some leases will enable you to transfer, but you must remain a co-signer to the lease even after the transfer.
This means you still have some obligations (post-transfer liability) after the transfer. Then there are some which allow you to do a complete transfer without any penalty; this is, of course, the best type of lease.
Then again, there may be a time requirement, that is, a period must have passed before you can do a lease transfer. Once you meet the requirement and your lease contract allows you to complete a transfer, you can proceed to the next step.
The best step is to find a lessor or buyer. The typical buyer would only want to use the car or vehicle for a short period—for instance, someone in town only for a few months. You can find one by word of mouth or online, and you might as well use both media.
Different online sites specialize in matching buyers and sellers, but they charge hosting fees. You will also have to pay a transfer fee to the dealership, but not to worry, none of these costs compares to paying to terminate your lease.
Before choosing a site to advertise on, you should compare different sites and make the best decision for faster results. Looking at reviews and assessing the site’s traffic can guide you to making the right choice. It would help if you also compared prices to get the best deal.
Once you have gotten prospective buyers, the next step is to get them. You can use a finance company to run a credit check on the buyer so that you can be sure of their financial capability.
When you and the buyer are satisfied with the terms of the contract (sometimes, some adjustments will be made to fit the buyer’s financial ability), you can go on to sign a contract.
Before you transfer ownership, you will have to negotiate with the buyer to determine the fees and costs they want to be responsible for. This may take a long time or not, depending on how long the negotiation takes.
Once an agreement has been reached, you can proceed to the next and final step: transfer of ownership. Remove your details from the current contract, and replace them with the new owner’s details.
Depending on if your lease allows you a partial or total transfer, it may or may not be the last time you will be involved with the car lease. If you still have obligations to the car, you will have to fulfill them until the lease term expires.
A lease transfer is the best option for terminating your lease contract. The process is relatively straightforward and can be easy provided the proper steps are taken.
There are also some costs attached to it, but they are in no way as expensive as the penalty you pay for terminating your lease contract. In the end, you have to make the best decisions to get the best deal for yourself.