If the new car model is out of your reach, think about leasing it for a specific period. This is where a vehicle lease agreement would be quite helpful. It is a contract between lessee and lessor that stipulates details of lease duration, mileage, and monthly payment.
You can choose a vehicle lease agreement template that has pre-written and properly formatted content. If you’re looking for one, check out this vehicle lease agreement to get instantly started with your new lease tenure.
A vehicle lease agreement is a legal contract used by the involved parties while transferring the vehicle possession from the owner to the one leasing the vehicle for a specific time period. Every lease agreement contains the following necessary information:
Involved parties
Vehicle description
Leasing rates
Lease duration
Insurance and warranty
The vehicle leasing agreement template applies to any motor vehicle with a VIN (Vehicle Identification Number), such as trucks, cars, motorbikes, recreational vehicles, mopeds, powerboats, motorized scooters, etc. In the case of powerboats, the Hull Identification Number (HIN) is used in the vehicle description section.
Other than a vehicle lease agreement, there are some other common names for this contract, which include:
Motor vehicle lease form
Vehicle lease contract
Car lease agreement
While drafting a vehicle lease agreement template, covering all aspects without errors is essential. Therefore, a vehicle lease agreement template can be the right option to avoid any unwanted legal complications during or at the end of the lease tenure.
A vehicle lease agreement has two parties, i.e., the lessee and the lessor. Here is a brief description of both:
Legal writing can be complicated for those without legal training. So, here's a look at some important terms that you will find in a vehicle lease agreement template.
Monthly Payment –– The agreed amount the lessee must pay to the lessor every month.
Lease Term –– Duration of the lease agreement.
Residual Value –– Estimated value of the leased vehicle at the end of the lease agreement.
Early termination –– The authority of the lessor to end the agreement before the agreed end date; it is subject to non-payment, penalties, and fees.
Mileage Allowance –– The number of miles the lessee can drive the vehicle during the lease agreement.
Wear and Tear –– The routine wear and tear that the vehicle will undergo during the lease agreement. The lessee will often be responsible for the wear and tear during the lease tenure.
Security Deposit –– Amount paid by the lessee to cover any potential damage and excessive wear and tear to the vehicle during the agreement.
Excess Mileage Fees –– Amount charged to the lessee in the event that they exceed the agreed upon mileage limit.
Leasing a vehicle has many advantages. Here is how it helps:
You can use a newer vehicle for a much lower monthly payment.
You don't need to worry about depreciating vehicle value because you can return it at the end of the agreement.
It lets you drive high-end vehicles that you may not be able to afford otherwise.
Registering the leased vehicle is the responsibility of the lessor. That's because the lessor permanently owns the car, unlike the lessee, who has possession of and access to it for a pre-decided duration.
At the end of a lease agreement, the lessee must return the vehicle to the lessor. However, if a provision in the contract allows for the purchase of the vehicle, the lessee has the right to take advantage of that.
If the lessee wants to buy the vehicle, the payments made during the agreement tenure are counted as part of the purchase payment. Moreover, the lessee may have to pay any penalties that apply at the end of the lease agreement.
This section discusses the leased vehicle's specifications and legal and relevant technical information. Usually, it includes:
Moreover, this section also discusses how the lessee wants to use the vehicle, i.e., for personal, household, or family use.
This part discusses the start and end date of the lease agreement, and there may be additional provisions for early termination too.
Part of the vehicle agreement template discusses the payment terms, precisely the monthly payment amount, due dates, and penalties for late payments.
Talks about the intended use of vehicles and restrictions related to monthly mileage, geographical limitations, etc.
In this section, you will find insurance details, minimum liability amount, and other requirements to claim insurance for the vehicle.
Discusses the lessee's responsibilities to repair and maintain the vehicle for the lease agreement period.
This section of the vehicle lease agreement template discusses the consequences of default and the lessor's rights in such a situation. If the lessee fails to adhere to the agreement provisions, the lessor has the right to repossess the vehicle and terminate the contract.
There are many online platforms to find a vehicle lease agreement template. Trusted providers, such as Lawrina, provide lease agreement templates for rental and sales agreements.
For quick and easy agreements, there are free PDF and Word templates readily available for the parties.
To create a vehicle lease agreement online, you must provide the essential details about your agreement. Here is how you can create your agreement in no time.
Provide the purpose of vehicle use, either personal or business-related.
Mention your state.
Provide the details of the lessor and lessee.
Enter vehicle description, i.e., color, make, model, body type, VIN, etc.
Provide lease details
Provide lease costs and fees. This can include expenses like security deposit, residual value, retail value, etc.
Mention the monthly payments.
Mention whether you want to add an early termination provision to the agreement.
Discuss any warranties
Provide insurance and deductible details.
Provide any additional clauses.
Sign the agreement to complete.
A vehicle lease agreement protects the lessor and the lessee legally. It enhances communication and reduces any risk of misunderstanding and lack of communication between the parties.
Here are a couple of common use cases for a vehicle lease agreement:
Personal Use - A vehicle lease agreement can be a great option when a person wants to use a high-end vehicle for a specific duration without buying the car.
Ride-Sharing Service - Ride services like Uber and Lyft use leased cars. It saves them from higher purchase costs and ensures quality and comfortable rides for the passengers.
While a lease agreement is pretty helpful in most cases, here are a couple of cases where you're better off not entering into such an agreement:
If you are expected to exceed the monthly mileage limit regularly, you will have to pay extra money in penalty.
If you don't intend to buy the vehicle after the contract ends, you will be without a vehicle at the end of the lease and won’t have anything to show for your payments., In this case, you might have to rent or lease a new vehicle.
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Leasing a car is a better option for various reasons. For instance, it has a lower monthly payment when compared to purchasing the same car. It's also easier to trade in a leased car, and your car is always under warranty coverage. Moreover, leasing a car can save money on taxes you’d have to pay if you purchased the vehicle.
Leasing a used car is possible, and it can reduce the monthly payment for the car. That's because used cars depreciate quicker when compared to new cars.
While it mainly depends on your funds, some stats suggest that July to October is the best time to lease a private car because that's when the new models generally arrive.
Personal car owners, rental service companies, small business owners, and car dealerships should make car lease contracts.
