Additional information

When you decide to commit to a car lease, you commit to the financing company (e.g. Honda Finance, Mazda Credit, etc.) to pay for a predetermined time (usually 24 to 60 months) a fixed amount equivalent to the depreciation of the car during that period. If you decide to break the contract and stop the payments, you will have an astronomical penalty that may total the remaining balance of the rest of the contract.

One solution to this dilemma: transfer your lease contract to someone else. Technically, this person will have all the lease responsibilities transferred to him or her along with the payments. You will then be free from the lease, for a very reasonable amount.

A credit-lease for an automobile is different from a car purchase. A lease means that someone pays the amount by which the vehicle depreciates during that period of time. The depreciation is the difference between the initial value and its value at the end of the lease rental (residual value), and is the primary factor that determines the amount of the credit-lease. The credit-lease has become popular because it offers the opportunity to drive better quality cars for a lower price, when compared to financing the whole amount of the purchase price.

Leasing has become more and more popular due to two major factors. First, the increase in car prices has made it harder for the average person to acquire one. Second, tax laws allow for larger tax returns for a rental than when purchasing a car.

The credit-lease is simply a method of payment for the use of a car, a truck or SUV for a predetermined period of time. Once the customer and the dealer find a price, the dealer sells the car to the financing company (Honda Finance for example), which rents the vehicle to the customer based on that price.

The dealer simply acts as an agent for the credit-lease company, for which he negotiates the terms concerning the lease and will get a commission for the service. Once the contract has been signed, the customer deals directly with the financing company, unless there is a problem with the vehicle (technical problem, warrantee, etc.)

Most lease-credit companies employed by the dealers are subsidiaries of the car manufacturer such as Honda Finance, GMAC, Ford Motor Finance, etc. Singing of the lease contract signifies that the customer accepts the monthly installments for a predetermined period of time (24, 36, 48 or 60 months).

At the end of the lease, the customer returns the vehicle to the credit-lease company in acceptable condition (normal wear-and-tear OK). The customer will need to pay any damages that are considered more than the usual wear, and/or the extra kilometers used above the initial contract. Finally, the customer will have the possibility, at the end of the lease, to take full possession of the vehicle by paying the residual value indicated in the contract.