Lease contracts can be very complicated, so it is important to understand the basic elements before you find yourself signing one at a dealership or with a leasing company directly. The following section outlines a typical lease contract and explains the fundamentals.
Disclosure statement
Insurance
Excessive wear and tear
Early termination
Destroyed or stolen vehicle
Lease contracts are required by Federal Law to include a section, typically called "FEDERAL CONSUMER LEASING ACT DISCLOSURES," in which key pieces of information are disclosed to you. This information includes the amount due at lease signing, the established monthly payment, other fees that will be assessed, the total value of all payments, the way in which the monthly payment is established, a statement explaining early termination, and an explanation of wear and tear.
It is extremely important to verify this information before you sign the lease, because mistakes are very common.
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Vehicle lease contracts typically require lessees to carry insurance. You should research the amount of coverage required for your given situation. It is recommended to carry maximum protection in order to fully protect yourself from the potential costs of repairs, accidents, or any other disasters. For details about coverage requirements for certain states, see "Shopping for your Insurance"
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It is important to recognize that each leasing contract requires that the vehicle be returned with no more than "normal wear and tear." Many contracts even outline the specifics of what "normal wear and tear" means. Generally speaking, you really just need to take good care of your vehicle throughout the lease and you will be OK. Any dents or scratches should be fixed before you drop off the vehicle in order to avoid paying the premium repair fees that would be assessed by the dealership.
If you have questions about what charges could be incurred at the end of your lease contract, take a look at the section entitled "Lease End Options" for more information.
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There are a few available options for early lease termination, which are discussed in detail in the section entitled "Exit your Lease Early". The options include:
- Dropping off the vehicle at the dealership before lease-end date and paying the numerous penalties that will be assessed
- Transferring your lease on Swapalease.com
- Refinancing your lease
- Buying your vehicle from the leasing company and selling it outright to another seller
You will want to be absolutely sure that you have given yourself the opportunity to terminate your lease early in the event you need to.
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If your vehicle is stolen or destroyed, it is important to have gap protection in order to avoid paying the penalties and payments that would be assessed by the leasing company and/or dealership. Gap protection (or “gap insurance”), will protect you against any fees that you might owe once your insurance policy has paid its share of the costs. Gap protection is often included in lease contracts, but it is important to ensure that you purchase it if it is not otherwise included.
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