Taking out a leasing contract allows you to have a vehicle at your disposal without paying for it all at once. The contract will state that the vehicle is owned by the dealership for the duration of the contract. The motorist will not be the owner until the end of the monthly payment (provided that he buys the vehicle). During a leasing, the company which finances the vehicle will register code 178 on the driving license, indicating that it belongs to the funding body. The contract can last up to 60 months and the motorist must respect all the terms of the contract. Despite the restrictions of leasing, it is however possible to buy back this contract. This in order to free themselves from certain obligations and take advantage of more advantageous conditions. Several solutions are thus available to the motorist!
Leasing is often restrictive ...
Indeed, as the financing organization is the owner of the vehicle, the motorist must respect his leasing contract. For example, he will not be able to sell the vehicle for the duration of the contract. The organization will require collision damage insurance for the vehicle. The motorist may also not exceed a certain number of kilometers traveled per month or per year on pain of paying a penalty. In addition, each monthly payment will be subject to VAT. You will understand that leasing does not only bring advantages!
Buy back your lease to sell your vehicle
During the term of the leasing contract, the motorist cannot sell it without the agreement of the owner (the financing body). If he decides to return his vehicle to the dealership, he may also have to pay a penalty related to the early termination of the contract. Thus, making a buyback of its leasing is the only option that will allow the vehicle to be resold.
With a purchase of your leasing, the code 178 will thus be removed from your driving license and you will be able to sell your vehicle freely. For information, code 178 is an entry on your gray card (traffic permit) which stipulates that the change of vehicle owner is prohibited. This due to a teirs owner of the vehicle (the leasing company).
Buy back your leasing to avoid paying too high monthly payments
The duration of a leasing contract lasts between 12 and 60 months. The motorist will have to pay his monthly payments, plus interest and VAT. However, he could meet during this period:
– Professional problems: losing a job, obtaining a company vehicle. All other situations which could be grounds for terminating the leasing contract. Each monthly payment could be a burden that the motorist may not be able to bear or become an unnecessary burden.
– Family obstacles : in 60 months, for example, many things can change in a lifetime. The motorist could get married, have a child, have a real estate project, get a divorce… thus, paying a monthly payment or keeping the vehicle would no longer be possible. He could also need another vehicle, reduce his monthly charges or release from the contract to be able to benefit from a loan for another project.
– Economic impediments : as mentioned above, each monthly payment can be too large. A drop in income, a dismissal or a child can impact the lifestyle of the motorist by forcing him to reduce his monthly expenses and charges.
– Legal impediments : the loss of the license could also force the motorist to give up his vehicle. He could no longer drive it for a significant period of time when he would still have to pay his monthly payments and other taxes. He can therefore consider buying back his lease in order to be able to get rid of his vehicle.
The options available to buy back your lease
If the motorist wants to own his vehicle, two options are available to him.
1. Buy back your lease yourself
It is possible to buy back your leasing with your own means. If, for example, the motorist obtains an increase in his income, a bonus or he simply decides to buy back the lease with his / her partner / companion, he can thus be the owner of the vehicle after the buy-back. In any case, this procedure is easier and will avoid administrative hassles. In addition, he will avoid paying VAT for each monthly payment and will be able to sell the vehicle at a good price.
2. Consolidate your financing with a bank
A grouping of credits with a bank could be a good option in the event of a lease buyout. This would allow leasing to be bundled with other credits and debts. So have them paid by the bank all at once. The bank will then become the sole creditor of the owner. He will thus be able to negotiate and benefit from an attractive credit rate with a longer repayment period.
The main benefit of this solution is to avoid being attached to the dealership (or the financing organization) for the duration of the leasing contract while owning your vehicle. In addition, with good conditions the monthly payments will often be lower.
If the motorist wishes to get rid of his vehicle, three options are available to him.
1. Return the vehicle
Even if this option is often a very bad economic operation, the motorist can always return his vehicle. He will thus (according to the terms of the contract) pay the remaining monthly payments and a penalty. In addition, a leasing contract generally provides for a residual value which must be met when the vehicle is handed over. If the vehicle at a lower value due to wear or damage, the motorist may be paid the difference between the expected residual value and the actual value of the vehicle at the time of surrender.
2. Transfer the contract to a third party
If selling the vehicle is prohibited during the leasing contract, it is nevertheless possible to transfer the contract to a third party. This third party can be an individual or a professional. It will still be necessary to take into account, if the contract stipulates it, that the contract cannot be transferred during a certain period (usually 13 months) or during the duration of the contract. The third party will therefore be registered in a new contract with the financing body (or the concession). He will therefore pay the next remaining monthly payments of the contract but he can also buy back the contract after the transfer.
3. Buy back your leasing contract and then sell the vehicle
The last solution to avoid having to pay a large sum when returning your vehicle, is to take out a private loan before the end of its leasing contract. Thus, it will be possible to repay the leasing before it expires and then sell the vehicle on its side, hoping to get a better price than if it was the dealer who had made this buyback.
Our conclusion on buying back your leasing:
Leasing allows you to have a vehicle at your disposal without having to pay for it all at once. However, there are also advantages to buying back your lease, such as becoming the owner of your vehicle, getting rid of your vehicle or saving money. There are several options to buy back your lease, whether with your own savings or by requesting a loan for example. But it is also possible to transfer the contract to a third party. A leasing contract being a commitment ranging from 12 to 60 months, it is necessary to make sure to know its advantages and disadvantages before subscribing it. In the event that you wish to buy back your leasing for the various reasons given, make your request on Lica and thus benefit from the best conditions in Switzerland!
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