Vehicle Leasing Agreement Information
A Vehicle Leasing Agreement is also known as a:
- Vehicle hire contract
- Vehicle hire agreement
- Car lease agreement
- Car hire contract agreement
What is a Vehicle Leasing Agreement?
A Vehicle Leasing Agreement is a contract made between a vehicle owner and an individual or company who leases or hires the vehicle for a predetermined amount of time.
Individuals and companies may use a Vehicle Leasing Agreement to lease new and previously-owned cars, trucks, and motorcycles. However, you can use the agreement with any motor vehicle that has a Vehicle Identification Number (VIN), which may include motorized scooters and recreational vehicles.
Who are the parties in a Vehicle Leasing Agreement?
The vehicle owner is known as the lessor and the person leasing the vehicle is known as the lessee. If two people co-own a vehicle, you can include multiple lessors within your Vehicle Leasing Agreement. If multiple people lease a vehicle together, such as spouses, you can include multiple lessees.
How do I write a lease agreement for a vehicle?
Prepare a Vehicle Leasing Agreement by compiling the necessary information:
- Lessor and lessee details: specify whether a party is an individual or organisation, and provide names and addresses
- Vehicle details: specify if the vehicle is new or used, the purpose of the vehicle, and the make, model, year, colour, and VIN
- Lease details: outline the lease length and the allowable limit of kilometres per year
- Cost details: determine the amount the lessee will pay by providing the retail value, residual value, security deposit amount, down payment amount, interest rate, and GST rate
- Payment details: specify the first payment’s due date, and if the lessor allows pre-authorised payments or charges late fees
- Termination details: explain the rules for early termination of the lease
- Warranty details: clarify the validity of the manufacturer’s warranty and if the lessor will provide supplementary coverage
- Insurance details: outline the minimum insurance coverage the lessee must obtain and the maximum deductibles for fire, theft, and collision
- Additional details and clauses: if needed, include a term giving the lessee an option to purchase
LawDepot’s template asks you a few simple questions, allowing you to customise and create your document according to your jurisdiction.
Should I use a Vehicle Leasing Agreement between an individual and a company?
Yes, a Vehicle Leasing Agreement is a necessary document when an individual leases a vehicle from a company. Generally, a dealership that leases vehicles will have its own documentation that protects the company and its lessees. However, if you’re negotiating a vehicle lease with a company that doesn’t ask you to sign a contract, you can suggest using LawDepot’s Vehicle Leasing Agreement template as a way to protect all parties involved.
When leasing a vehicle, what am I responsible for?
You are responsible for obtaining the necessary insurance coverage and maintaining the vehicle. If you return the leased vehicle with excessive interior wear, dents or scratches, or any significant mechanical damage, the lessor may choose to charge you for the repairs.
Some lessors may limit the number of kilometres the lessee can use. In this case, you’re responsible for keeping track of your mileage. If you exceed this limit, the lessor may charge a mileage fee at the end of the lease. Alternatively, a lessor may offer a vehicle lease with unlimited mileage.
Why should I use a Vehicle Leasing Agreement?
Use a Vehicle Leasing Agreement to protect the interests of both the lessor and the lessee. Documenting the lease terms helps prevent misunderstandings between the two parties and provides proof in the event of a legal dispute.
If you are negotiating lease terms with another individual, you likely won’t have access to a typical dealership lease form. Instead, use a Vehicle Leasing Agreement. For example, you could use this document when loaning your van or truck to a friend or family member for an extended period of time.
What is a Vehicle Leasing Agreement with the option to purchase?
Including an option to purchase in a Vehicle Leasing Agreement gives the lessee the choice to purchase the vehicle at any time during the lease or at the end of the lease. Generally, the purchase price is the residual value of the vehicle, unless the lessee negotiates a lower price. The residual value is the estimated value of the vehicle at the end of the lease term.
Can I end my Vehicle Leasing Agreement early?
Your ability to end your lease early depends on the contract and the other party’s willingness to accommodate your request. If the other party consents to early termination of the agreement without penalty, you’ll be able to end your lease without any problems.
However, the lessee must pay if a Vehicle Leasing Agreement states that the lessee is responsible for the difference between the residual value and the realised value when terminating early. The realised value is the actual sale price that the lessor can sell the leased vehicle for after a lessee terminates the lease early.
What happens at the end of a vehicle lease?
At the end of the vehicle lease term, the lessee returns the vehicle to the lessor. If the lessee paid a security deposit at the beginning of the lease, the lessor will inspect the vehicle and determine if the lessee will receive their deposit back. Besides properly maintaining your leased vehicle, you can better ensure the return of your security deposit by removing all your personal items from the vehicle, vacuuming out the interior, and washing the exterior.
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