Understanding the Lease Contract
Lease contracts are legal documents that bind two parties with terms and conditions that have to be abided by. While you may trust the leasing company with the technicalities of the process and also leave the finer details on the agents handling your lease, it is always a good idea to know what the contract really holds.
Given that these contracts can be very complicated, only understanding the basics is enough for you to make sense of them. Keep an eye out for the following components in a lease contract. Read and re-read them to make sure you understand each point.
- Disclosure Statement
It is required by law for every lease contract to have a section called, ‘Federal Consumer Leasing Act Disclosures.’ This section discloses all information related to leasing payments, down payment, the total value of payments, other fees, an explanation of early termination and what will happen in case of wear and tear. It is important to verify this information before signing the contract.
Lease Contracts usually require lessees to have adequate insurance coverage that can support them in the event of an accident.
- Excessive Wear And Tear
Normal wear and tear are accounted for within the lease contract. However, if your car has been subjected to excessive conditions, you will be charged for these. Therefore, make sure you take good care of the vehicle while you are using it.
- Stolen or Destroyed Vehicle
Covering up for the costs resulting from theft or destruction of your vehicle may be beyond the scope of the insurance policy. In such a case, Gap Insurance is often bought by lessees. However, make a fair assessment of your basic insurance cost and coverage before you purchase Gap Insurance.