Vehicle Leasing Agreement Information
A Vehicle Leasing Agreement is also known as:
- Vehicle rent agreement
- Vehicle lease agreement template
- Car lease contract
- Auto lease
What is a Vehicle Leasing Agreement?
A Vehicle Leasing Agreement is a contract made between a vehicle owner (lessor) and someone who pays the owner to have possession of the vehicle for a fixed period (lessee). The lease payment consists of a vehicle depreciation fee, a finance fee similar to the interest charged on a car loan, and any relevant sales taxes. The lessee typically pays this fee monthly.
What kinds of vehicles can I lease with a Vehicle Leasing Agreement?
Using LawDeopt’s Vehicle Leasing Agreement template, a lessor can lease any motor vehicle with a Vehicle Identification Number (VIN). You can create an auto lease for:
- Cars
- Trucks
- Motorcycles
- Motorized scooters
- Mopeds
- Recreational vehicles
- Powerboats with a Hull Identification Number (HIN)
Can you lease a used car?
Yes. LawDepot’s Vehicle Leasing Agreement template allows you to lease both new and used vehicles. If you’re leasing a used vehicle, our template asks you to disclose any information regarding the car's condition that may be vital to the lessee, including:
- Has the vehicle ever been in an accident?
- Has the vehicle ever had fire, flood, or structural damage?
- Are the anti-lock brakes or airbags functional?
- Has an insurer ever declared the vehicle to be irreparable, or classified it as rebuilt?
- Are there any other details that may affect the lessee's decision to enter the lease?
Our lease template asks you to provide information on the vehicle’s warranty. First, confirm if the warranty is still valid and, if it is, how long is left on the warranty. If you are providing a supplementary warranty, state whether the lessee will have to pay for it. A supplementary warranty is when the lessor or a third party will be providing a warranty for repairs that covers the period when the manufacturer's warranty expires until the end of the lease term.
Why should I use a Vehicle Leasing Agreement?
Create a car lease agreement between two parties whenever you negotiate a vehicle lease without a dealership lease form. For example, you could use a Vehicle Leasing Agreement when loaning a car or truck to a friend or family member.
Using a Vehicle Leasing Agreement helps protect the interests of both the lessor and the lessee. By documenting the terms of the lease, both parties can avoid any misunderstanding or miscommunication.
What’s the difference between leasing and buying a vehicle?
When buying a vehicle, there’s an exchange of ownership between two parties. The vehicle’s ownership transfers from one party to another. This kind of transaction requires a Bill of Sale. The person selling the vehicle relinquishes all their rights to it.
Conversely, when a vehicle owner leases a vehicle, they remain its owner, meaning the lessee doesn’t have the right to modify the vehicle. Also, the lessor often expects the lessee to return the vehicle in the same condition. Essentially, the lessee rents the vehicle for a set amount of time. As a result, the lessor determines the portion of the vehicle’s total cost that the lessee pays.
What are the responsibilities of the vehicle lessee?
The lessee is responsible for providing the necessary insurance coverage and must keep the vehicle maintained and in good repair. If the lessee returns the leased vehicle with excessive interior wear, large dents or scratches, or any major mechanical damage, the lessor may bill the lessee for the repairs.
Some vehicle leases place a limit on the number of kilometres the lessee can use. A common mileage allowance is around 19 000 kilometres per year over the term of the lease. If the lessee exceeds this limit, the lessor can charge a mileage fee at the end of the lease. Alternatively, a vehicle lease may offer unlimited mileage, which does not place a cap on the distance travelled.
What happens at the end of the vehicle lease term?
At the end of the vehicle lease term, the lessee returns the vehicle to the lessor. If it’s an option, the lessee may agree to purchase the vehicle. If the lessee opts to purchase the vehicle, the lessor can apply their lease payments against the total purchase price.
A Vehicle Leasing Agreement also lists any penalties for ending the lease before the term is up. Early termination penalties can include paying the balance of the remaining lease payments, along with additional charges.
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