What is a car lease?
Buying and leasing are car are different. When you buy a car, you become responsible for the entire cost of the car, no matter how long you keep it or how often or far you drive it. When you obtain a new car lease, you only pay for a portion of the car-that is, the portion you “use” while you are driving it. And, unlike buying, leasing doesn’t usually require a down-payment; although you may be responsible for paying certain fees and a security deposit. There are also penalties for terminating the car lease early. But whether buying or leasing is best depends upon your individual needs and circumstance. And if you do decide to lease, it doesn’t necessarily mean you’re stuck with that car for the duration of the lease term.
What is a lease assumption?
A lease assumption happens when you allow someone else to take over your lease in order to get out of your contract without incurring penalties. For instance, you’ve been driving your leased car for awhile now and want to exchange it for something different. Or perhaps you’ve found a car you’d really like to buy, but you can’t afford both car payments and lease payments. The problem is you’ve still got 12 months left to go on your lease. If you end it now, it’s going to cost you. Cue your brother, who thinks your car is quite nice and wouldn’t mind driving it himself. Since his credit is good enough, your brother can assume your lease, releasing you from your contractual obligations while avoiding any penalties. Now, you’re able to buy the car of your dreams-well, today’s dream anyway.
There are a few benefits to a lease assumption. For the one assuming the lease, there is the shorter-term commitment and lack of money-down requirements. For the one getting out of the lease, there are no penalties incurred and they are free to move on.
What is a lease swap?
A lease swap is a lease assumption that goes both ways. Someone takes over your lease while you take over theirs or someone else’s. Basically, you’re swapping one lease for another, with no need to start over with a full-term lease contract.
Why are lease swaps attractive?
Lease swaps are an attractive way to exchange cars because by swapping your lease you can 1) get out of your original lease without penalties, 2) save thousands on unnecessary lease obligations, and 3) end up with a much shorter-term lease agreement than otherwise possible. Thus, if you decide to swap a lease you have much to gain and little to lose.
For people who enjoy changing cars ever few years, or even every few months, lease swaps are the way to go. But remember, whether leasing for the first time, assuming a lease, or swapping one, once you signed on the dotted line you become responsible for the remaining lease term and amount. So, as with any contractual obligation, make sure to read the fine print before you commit.