Leasing a vehicle is different from renting or purchasing a new one. It’s required to sign a specific agreement written in proper legal jargon. It’s important to understand what information a vehicle lease agreement should contain.
Leasing a vehicle is a type of auto financing in which a dealer gives it a vehicle to a person for a specific period of time against a set amount of money the owner will get. This agreement includes tons of other things as well which one needs to understand before signing a vehicle lease agreement template or making one for its customers. You may also like Vehicle Maintenance Log Templates.
How the Vehicle Leasing Agreement Works?
Leasing a vehicle means to own someone else vehicle for a set period of time against some amount of money under specific agreement terms. Usually, this approach is better considered better than taking a vehicle loan as it only covers the amount on a need to pay for the depreciation of vehicles for that particle period of time.
There are few drawbacks to leasing as well. It’s not suitable monetarily for a longer period of time. Also, under leasing one never owns a vehicle actually but drives it under set terms agreed by both parties in the legal leasing agreement. You may also see Daily Checklist Template.
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Terms to use in Vehicle Lease Agreement Template
There are few legal terms that must be included and well understood before making a vehicle lease agreement or signing it.
It must be clearly stated that the lease is a closed-end or open end. In a closed-end lease, the lessee doesn’t need to pay any amount at the end of the agreement. Unless any violation of the agreement presents in the case. While in the open-end lease, the future value of the vehicle isn’t defined. So, a lessee may get a refund or have to pay some money at the end of the lease based on the actual value of the vehicle at that time.
Gross capitalized cost must also present on the agreement. It includes the present value of the car, the amount of the services agreed in the agreement. You may also check Mileage Log Templates.
The residual value of the vehicle or the in a close lease the value of the car at the end of the lease.
Depreciation is the rate at which the vehicle value is lost with time. Depreciation of the vehicle is a major part of the lease payment.
Rent charges are the amount of money the lessor will earn against the lease of a vehicle. Other small charges include GAP, taxes, and agreement violation charges.
How to make a Vehicle Lease Agreement Template?
A basic vehicle lease agreement templates contain two major sections. The financial section and the restrictions section of the agreement are necessary.
The financial section of the lease agreements includes the details of what amount of money the lessee needs to pay. It usually includes the amount due at the time of signing the agreement, monthly payments, purchase option and early termination charges of the agreement. Here you can also explore more business templates.
In the restrictions section, terms of the use of lessor vehicles are stated against which the agreement has been made. Violation of these terms will result in penalties. Penalties and restrictions for mileage, maintenance and excessive wear and tear are mostly covered under restrictions section.