Leasing a car or other personal vehicle has several benefits. The main ones that make this an option for getting some wheels are the lower monthly cost and smaller down payment. Like renting an apartment, though, this arrangement comes with a lease maturity date. When your lease ends, Car and Driver notes that you must return your vehicle or make new arrangements with the dealership and finance company.
Extend Existing Lease Period
Generally, your dealership and the finance company that you pay monthly start to send reminders about your impending lease maturity date several months in advance, according to Edmunds. During this time, you might receive an offer to extend your lease. However, choosing to extend your lease requires new paperwork. Your initial contract still ends on the original date or on the last day of the lease return grace period, if applicable.
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To extend your lease, talk to your dealership and negotiate the terms and length of the extension. Some dealerships allow month-to-month extensions, while others might only agree to extend your lease for a set number of months. However, the new lease end date is usually a maximum of a year. Your monthly payment will continue to be the same amount during your lease extension, says Edmunds. You won't need to renegotiate your mileage allowance. Depending on the length of your current lease, the vehicle warranty might expire at the end of the term of your lease. You'll need to renew your vehicle registration and possibly notify your insurance carrier that you have extended vehicle's lease.
Buy Your Leased Vehicle
If you decide you want to keep your vehicle when the lease maturity date arrives, consult your contract. First find out if your lease has a buyout clause. Then locate the residual value of the vehicle at lease expiration. Negotiate with your dealership to get a firm purchase or buyout price. Most dealerships are motivated to let you purchase your vehicle and drive it away.
Unfortunately, none of your previous lease payments will apply towards your purchase at lease end. In addition, you'll require a new financing arrangement, based on your buyout price agreement. Depending on your residual value and your financing terms, your payments might be higher than when you leased your vehicle. Ask the dealership about an extended warranty unless you want to suddenly become responsible for all of the maintenance on your newly purchased vehicle.
Leased Vehicles Repossession
A vehicle lease is a legal contract that your dealership, finance company and you have agreed to follow. Some contracts have a lease return grace period. Even without one, your dealership might let you return your vehicle a week or so past the lease maturity date. In both cases, you have the responsibility of contacting the dealership, the legal owner of your vehicle. Your contract will spell out what arrangements are possible.
Failing to return the vehicle and negotiating a new payment arrangement puts your vehicle at risk of repossession. According to the Federal Trade Commission, if you break the lease terms, the finance company and dealership can reclaim their property, often without notification. Once the vehicle has been repossessed, you might still be responsible for paying more money to the dealership due to excess mileage or wear and tear fees.