Vehicle Leasing Agreement
A Vehicle Leasing Agreement is also known as:
- Car Lease Agreement
- Vehicle Lease Contract
- Motor Vehicle Lease Form
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 predetermined period (lessee). The lease payment, which is typically
paid monthly, consists of a vehicle depreciation fee, a finance fee which
is similar to the interest charged on a car loan, and any relevant sales
A Vehicle Leasing Agreement is commonly used with new and previously owned
cars, trucks, and motorcycles. However, the agreement can also be used with
any motor vehicle that has a Vehicle Identification Number (VIN), which
includes motorized scooters and mopeds, recreational vehicles, and power
boats with a Hull Identification Number (HIN).
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 or, if the option is provided, agrees to
purchase the vehicle. If the lessee opts to purchase the vehicle,
their lease payments are applied against the total purchase price.
A Vehicle Leasing Agreement also lists any penalties associated
with ending the lease before the term is up. Early termination
penalties can include having to pay the balance of the remaining
lease payments, along with additional charges.
What is the vehicle lessee responsible for?
The lessee is responsible for providing the necessary insurance
coverage, and must also keep the vehicle maintained and in good repair.
If the leased vehicle is returned with excessive interior wear, large
dents or scratches, or any significant mechanical damage, the lessor
may choose to bill the lessee for the necessary repairs.
Some vehicle leases place a limit on the number of miles the lessee
can use; a common mileage allowance is 12,000 miles per year over the
term of the lease. If the lessee exceeds this limit, a mileage fee is
charged at the end of the lease. Alternatively, a vehicle lease may
offer unlimited mileage, which does not place a cap on the distance
Why should I use a Vehicle Leasing Agreement?
It is recommended to use a Vehicle Leasing Agreement whenever a
vehicle lease is being negotiated between two parties where a
dealership lease form has not been provided. 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 will help to protect the
interests of both the lessor and the lessee as documenting the
terms of the lease will help to avoid any misunderstanding or
miscommunication between the two parties.