A leasing contract gives you access to a vehicle without having to pay for it all at once. The contract stipulates that the vehicle is the property of the dealer for the duration of the contract. The motorist only becomes the owner at the end of the monthly payments (if he buys the vehicle back). When leasing, the company financing the vehicle will register code 178 on the vehicle permit, indicating that it belongs to the financing organization. The contract can last up to 60 months, and the motorist is obliged to comply with all its terms. Despite the restrictions of leasing, it is possible to buy back the contract. This frees you from certain obligations and enables you to benefit from more advantageous conditions. Several solutions are available to the motorist!
Leasing is often restrictive...
As the financing company is the owner of the vehicle, the motorist is obliged to respect the leasing contract. For example, he or she may not sell the vehicle for the duration of the contract. The financing company will require collision insurance for the vehicle. The motorist may also not exceed a certain number of kilometers driven per month or per year, on pain of paying a penalty. What's more, each monthly payment will be subject to VAT. As you can see, leasing is not all about advantages!
Buying a lease to sell your vehicle
During the term of the leasing contract, the motorist cannot sell the vehicle without the agreement of the owner (the financing organization). If you decide to return the vehicle to the dealer, you also run the risk of having to pay an early termination penalty. So, buying back your lease is the only option that will enable you to sell your vehicle.
With a lease buyback, the code 178 will be removed from your vehicle registration and you will be free to sell your vehicle. For your information, code 178 is an entry on your vehicle registration document (carte grise) which states that it is forbidden to change the owner of the vehicle. This is due to a change of ownership of the vehicle (the leasing company).
Buy your lease to avoid high monthly payments
A leasing contract lasts between 12 and 60 months. The motorist will have to make monthly payments, plus interest and VAT. During this period, he or she may encounter :
– Professional problems: loss of employment, obtaining a company car. All other situations that could be reasons for terminating the leasing contract. Each monthly payment could be a burden that the motorist may not be able to bear, or it could become an unnecessary burden.
– Family obstacles : In 60 months, for example, many things can change in a person's life. The motorist might get married, have a child, have a real estate project, get divorced... so paying a monthly instalment or keeping the vehicle would no longer be possible. He may also need another vehicle, reduce his monthly expenses or free himself from the contract to benefit from credit for another project.
– Economic impediments : As mentioned above, each monthly payment can be too high. A drop in income, redundancy or having a child can all have an impact on the motorist's lifestyle, forcing him or her to reduce monthly expenses and charges.
– Legal impediments : the loss of a license could also force the motorist to give up his vehicle. He won't be able to drive it for much longer, while still having to pay his monthly installments and other taxes. He may therefore consider buying back his lease in order to get rid of his vehicle.
Options for buying back your lease
If you want to own your own vehicle, you have two options.
1. Buy your leasing yourself
It is possible to buy back your leasing with your own money. If, for example, the motorist obtains an increase in income, a bonus or simply decides to buy back the lease with his or her partner, he or she can become the owner of the vehicle after the buy-back. In any case, this procedure is easier and avoids administrative hassles. What's more, he'll avoid having to pay VAT on each monthly instalment, and will be able to sell the vehicle at a good price.
2. Consolidate financing with one bank
Credit consolidation with a bank could be a good option when buying a lease. This would make it possible to combine the leasing with other credits and debts. The bank would then become the owner's sole creditor. The bank would then become the owner's sole creditor. The owner can then negotiate and benefit from an attractive credit rate with a longer repayment term.
The main benefit of this solution is to avoid being tied to the dealership (or financing organization) for the duration of the leasing contract, while still owning the vehicle. What's more, with the right conditions, monthly payments are often lower.
If the motorist wishes to dispose of his vehicle
1. Returning the vehicle
Even though this option is often a very bad business move, the motorist can always return the vehicle. Depending on the terms of the contract, he or she will have to pay the remaining monthly instalments plus a penalty. In addition, leasing contracts generally stipulate a residual value, which must be paid when the vehicle is returned. If the vehicle has a lower value due to wear and tear or damage, the motorist may be required to pay the difference between the stipulated residual value and the actual value of the vehicle at the time of handover.
2. Transfer the contract to a third party
Although selling the vehicle is prohibited during the leasing contract, it is possible to transfer the contract to a third party. This third party may be a private individual or a professional. However, if the contract so stipulates, the contract cannot be transferred for a certain period (usually 13 months) or for the duration of the contract. The third party will then be enrolled in a new contract with the financing organization (or dealership). The third party will then pay the next remaining monthly instalments of the contract, but may also buy back the contract after the transfer.
3. Buy your leasing contract and then sell the vehicle
The last solution to avoid having to pay a large sum when handing over your vehicle is to take out a private loan before the leasing contract expires. In this way, you can pay off the lease before it expires and then sell the vehicle on your own, hoping to get a better price than if the dealer had done the buy-back.
Our conclusion on buying a lease
Leasing allows you to have a vehicle at your disposal without having to pay for it all at once. However, there are also advantages to buying back your lease, such as becoming the owner of your vehicle, getting rid of your vehicle or saving money. There are a number of options for buying back your lease, from your own savings to taking out a loan. But it's also possible to transfer the contract to a third party. As a leasing contract is a 12- to 60-month commitment, you need to be aware of its advantages and disadvantages before signing up. If, for any of the reasons mentioned above, you wish to buy back your leasing contract, we will be happy to assist you, make your request on Lica and benefit from the best conditions in Switzerland!