Buying back a lease before the end of the term, 2 good reasons to do it
You have an ongoing leasing contract and want to terminate it? Lease buyback is a possible solution in the following 2 cases:
- You want to keep your vehicle and become its owner
- You want to get rid of your car without suffering the heavy financial consequences applied by the dealer following an early termination of the contract
Become the owner of your car
When you take out a leasing contract, there is a retention of title code « 178 » on your vehicle registration document, which means that the car belongs to the financing organisation. A leasing contract is a kind of rental contract that becomes an effective sale (transfer of ownership) on the day you have paid the last franc of the debt.
The reasons for becoming the owner of your vehicle with a private loan are as follows:
- More flexibility throughout the life of the contract. You can sell the car whenever you want.
- You can drive the number of miles you want.
- Choose the type of insurance you want.
- Benefit from tax deductions. With leasing contracts, there are no tax deductions for the interest paid (3% to 5%).
- No VAT (7.7%) is charged on each monthly instalment as is the case for leasing contracts.
Getting rid of your car
Many situations can make you want to part with your vehicle:
- A birth
- A divorce
- A drop in revenue
- Moving abroad
- Loss of the driver’s license
- and so on
There are 2 solutions to avoid the very high costs associated with the early termination of a leasing contract:
- You buy back your leasing contract using a bank loan. Then you sell your car and pay off the loan at any time. The law allows you to repay a personal loan early without having to suffer penalties related to early repayment. The bank may charge you an administrative fee of a few hundred francs for terminating the insurance part of the loan agreement.
- You find someone who is willing to take on your leasing contract on the same terms as you signed it and then negotiate directly with the leasing company. This will only be possible if the person has a financial situation that allows them to take on an additional outlay on their budget.
How to buy out a lease
- Apply for a personal loan from Crédits Conseils SA.
- You must meet the conditions of solvency, no defaults or default proceedings, no negative credit history codes, employment, etc. Just keep in mind that the private loan conditions are stricter than those applied when applying for a leasing contract.
- Once all the required documents have been received, you will receive an answer within 24 hours.
- You receive the money 14 days after signing the contract (withdrawal period).
- You refund the organisation that financed your leasing contract and you become the owner of the car.
Which bank to go to
In most cases, the « Leasing » financing establishment will not be able to offer « Private loans », as many of these establishments depend on the vehicle manufacturer and do not offer other financial products. For a person who has financed the vehicle through an organisation not attached to a car manufacturer such as Bank Now or Cembra, the customer will not be able to ask to buy back the leasing contract with a private loan, because these organisations do allow buying back their own products with another product from their range. This is to protect their leasing channel from their loan channel.
A broker accredited by banks such as CC Crédits Conseils SA will be able to direct you to the financial establishment best suited to your situation.
Lease buybacks can be made at any time, even to finance the residual value of the vehicle.
It is even possible to have lower monthly instalments than with leasing, since a private loan can last 120 months, compared to a maximum of 60 months for a leasing contract.
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