At the end of the lease period, the federal Consumer Leasing Act (CLA) puts a limit on how much the dealer can collect. The dealer cannot collect more than three times the average monthly payment.
For the following reasons, a dealer may collect a higher amount:
- The miles are higher than stated in the lease or the vehicle has unreasonable wear and tear.
- There was an agreement to pay an amount greater than what is stated in the original contract.
- The Lessor wins a lawsuit for a higher amount.
At the end of the term of the lease, the dealer may opt to sell the car. If the car is sold for less than the residual value specified in the leasing contract, you may be obligated to pay as much as three monthly payments to make up the difference.
You may want to negotiate to have the right to approve the final sales price as part of the lease agreement, so the dealer does not sell the leased car for less than the residual value just to get the car off the lot.
A few other things to keep in mind:
- You do not get a refund if you stay under the mileage limit.
- You probably won't have to pay for excess mileage if you purchase the car at the end of a closed-end lease and you exceed the mileage allowance.
If you have any questions regarding accounting, domestic taxation, essential business accounting, international taxation, IRS representation, U.S. tax implications of Real Estate transactions or financial statements, please give us a call at 305-274-5811.
Source: Thomson Reuters