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Leasing buyback: principle and operation

Le monde automobile 24/08/2021 40

Leasing buyback: principle and operation

What is a lease buyout?

A motorist who has taken out a leasing contract for his car may find himself obliged to part with his car or to change it.

To buy back his lease, three possibilities are then open to the motorist:

Return of the vehicle before the end of the contract: the lessee returns the car to the financing organization. He must then pay all the monthly installments provided until the end of the contract. The funding body may also ask it to pay additional penalties for termination during the contract. So this is a cheap but useful way out if you want to get rid of the vehicle. Transfer of the leasing contract to a third party: a third party takes over the leasing contract with the conditions for which the contract was signed and for the remaining term provided for by the contract. Buyout of a leasing contract: the tenant can decide to buy back his contract himself or to have it bought back by a concession or a credit institution.

Several types of lease buyback

Lease buyback by the motorist himself

The motorist decides to buy back the contract himself. He pays the remaining monthly payments. If he has opted for an LOA (Rental with Purchase Option), he can then pay the residual value of the vehicle and become the owner of the vehicle. If he has opted for an LLD (Long Term Rental), he pays the monthly installments and returns the vehicle (which does not have much interest since he is paying for a service that he does not receive).

Leasing buy-back by a third party

A motorist can also buy back the leasing. In this case, there are two solutions, either a leasing transfer is carried out and the contract is transferred as it is from one tenant to another. This solution is the most profitable if you want to get rid of your leasing contract. Some sites, such as leazing.fr are specialized in leasing transfer.

To find out more about leasing transfer, see: Leasing transfer, how does it work?

The other solution is to offer the third party to pay the remaining monthly payments and the residual value of the car. The contract is then terminated. It is difficult to find a leasing contract taker because the administrative procedures are long and complex, and the buyer may be reluctant to do additional work. But don't worry, we've got you covered! We find a buyer for your car and we take care of all the paperwork with you.

Leasing buyback for a concession

A concession can agree to buy back a leasing contract. Often this is done on an ad hoc basis by the concessionaire. Indeed, the concession must be a winner in the operation. It can offer the motorist a buyout of the leasing contract against the purchase of a new car or against a new LOA or LLD leasing contract.

The repurchase of LOA or LLD by a bank

If you go through a bank, it is possible to buy back only the credit associated with the leasing contract. Note that the contract subscription period must be at least 13 months to opt for this outcome. This process is usually done by pooling the loans taken out by the motorist with the bank. The repayment periods for monthly payments are lengthened and the amount of credit to be repaid is higher. But it allows you to have lighter monthly payments.

If the motorist has opted for an LOA, then he automatically becomes the owner of the vehicle. The leasing contract is terminated. The residual value of the car defined at the start of the LOA contract remains to be paid, but it is included in the credit to be reimbursed.

This option is useful for getting the car quickly, but it generates a higher loan to repay over the long term.

Do you want to sell your car under LOA? Choose Kyump, your trusted intermediary in peer-to-peer sales. We find you a buyer in just two to three weeks and take care of all the paperwork for you. Thanks to us, sell well, sell serene!

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