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Vehicle Leasing Agreement

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Initials: ___________ Page of
Initials: ___________ Page of

VEHICLE LEASING AGREEMENT

THIS VEHICLE LEASING AGREEMENT (this "Lease") dated this _____ day of _____________, 20____

BETWEEN:


________________________ of _____________________________________
(the "Lessee")

OF THE FIRST PART

- AND -


________________________ of _____________________________________
(the "Lessor")

OF THE SECOND PART

IN CONSIDERATION of the mutual covenants and promises in this Lease and other valuable consideration, the sufficiency of which consideration the Parties hereby acknowledge, the Lessor leases the Vehicle described in this Lease to the Lessee, and the Lessee leases the Vehicle from the Lessor on the following terms:

  1. Vehicle Details
  2. The Lessor desires to lease the vehicle described below (the "Vehicle") to the Lessee, and the Lessee desires to lease the Vehicle from the Lessor for business use.
    • New/Used: Used
    • Year: _________
    • Make: ____________________
    • Model: ____________________
    • Body Type: Sedan
    • Color: __________________
    • VIN: _________________________________
  3. The Lessor owns the Vehicle that is the subject of this Lease.
  4. Lease Cost Disclosure
  5. The full retail value of the Vehicle as of this date is $1.
  6. The residual value (the "Residual Value") of the Vehicle is $_________________.
  7. The amount to be amortized over the term of the Lease is $1.00.
  8. The Lease interest rate is 0% per annum.
  9. The term of the Lease is none month (the "Term").
  10. This Lease includes unlimited miles. The Lessee will not be required to pay any fees for miles used.
  11. The Lessee will provide a down payment of $_________________, which will be subtracted from the amount to be amortized over the Term.
  12. The total amount payable by the Lessee upon signing this Lease is $1.06. At the conclusion of the Lease, if all payments are made, this will be the total cost of the Lease, excluding any cost for repairing excess wear and tear to the Vehicle.
  13. The monthly payment under this Lease is $1.00 (the "Monthly Payment"). The first payment will be due upon signing and the following payments will continue each month on the same day of the month as the Lease is signed. If a monthly payment is due on the 29th, 30th, or 31st, then it is due on the last day of the month in a month that does not have a 29th, 30th, or 31st.
  14. Monthly Payments may be made by electronic funds transfer, check, post-dated check, money order, bank draft or pre-authorized payment.
  15. At the start of the Term, the Lessee will pay the sales/usage tax of $0.06. The sales/usage tax amount provided in this clause is only an estimate and will be adjusted upon notice of the Lessor to adjust for increases or decreases in taxes.
  16. Except as expressly provided in this Lease, no warranties, either express or implied, statutory or otherwise, as to any matter whatsoever, have been given by the Lessor.
  17. Lessee Obligations
  18. The Lessee will assume all risk of loss and damage to the Vehicle. The Lessee is responsible for insuring the Vehicle based on its full value, with the following coverage:
    1. bodily injury and property damage coverage in the minimum amount of $1,000,000.00;
    2. comprehensive fire and theft insurance with a maximum deductible of $250.00; and
    3. collision insurance with a maximum deductible of $250.00.

    The Lessee will ensure that the Lessor is named as registered owner, and as "additional insured" and loss payee in the insurance policy (the "Insurance Policy").

  19. The Lessee agrees to co-operate with the Lessor and the insurance company in pursuing or defending any claim or action resulting from the use of the Vehicle. Any award or money the Lessee receives as a result of a claim or action is to be assigned to the Lessor. If the Lessee fails to maintain insurance or if a claim is denied by the Lessee's insurance company for any reason, the Lessee remains responsible to pay the total cost of the Lease.
  20. The Lessee agrees to indemnify the Lessor from any loss, and in order to prevent such loss, the Lessee will do the following:
    1. keep the Vehicle free of encumbrances, such as fines and liens;
    2. indemnify the Lessor from all claims and expenses resulting from the maintenance and use of the Vehicle; and
    3. pay all amounts owed under this Lease without deducting any amounts the Lessee claims to be owed by the Lessor.
  21. The Lessee is prohibited from using, transferring, or altering the Vehicle, as follows:
    1. the Vehicle is not to be used by drivers without an appropriate license or those restricted under the Insurance Policy;
    2. the Vehicle is not to be used illegally, in a manner contrary to the Insurance Policy, or as a vehicle for hire or public transport;
    3. the Lessee will not transfer or assign this Lease, or ownership of the Vehicle, to a third party, except with the Lessor's prior written consent. The Lessee will also ensure that the Vehicle is not seized, confiscated, or involuntarily transferred, even if the Vehicle is the subject of judicial or administrative proceedings;
    4. the Lessee will not remove the Vehicle from the state in which this Lease is signed without the Lessor's prior written consent, with the exception of trips within continental North America of less than 60 days; and
    5. the Lessee will not install accessories in the Vehicle, or alter the Vehicle in any way, without the Lessor's prior written consent.
  22. During the Term of the Lease, the Lessee will be responsible for paying all fees required for registration, licensing, testing, and any inspection of the Vehicle requested by a government or other authority. The initial cost of registration must be paid prior to removing the Vehicle from the Lessor's possession.
  23. Inspections
  24. The Lessee acknowledges that the Vehicle has been inspected and the Lessee accepts the Vehicle as being in a good state of repair, not including manufacturer's defects which would not have been visible upon inspection.
  25. The Lessor has the right to inspect the Vehicle, without prior notice, at all reasonable times during the Term of this Lease.
  26. Event Of Default
  27. The Lessee will be in default under this Lease if:
    1. the Lessee fails to make a Monthly Payment on the due date;
    2. a bankruptcy, receivership, or insolvency proceeding is initiated by the Lessee or against the Lessee;
    3. a creditor or a government authority seizes the Vehicle;
    4. the Lessee has misrepresented personal or financial information;
    5. the Lessee is no longer living;
    6. the Vehicle is stolen or damaged beyond repair;
    7. the Vehicle is not returned at the end of the Term; or
    8. the Lessee breaches any other term of this Lease.
  28. In the event that the Lessee defaults under this Lease, the Lessee will be required to immediately pay all amounts owing applicable to the Vehicle for the remainder of the Term.
  29. If the Lessee defaults under this Lease, the Lessor will pursue the remedies outlined in this Lease, in addition to any other remedies allowed by law. If the Lessee defaults, the Lessor may terminate this Lease, and may recover the Vehicle and sue the Lessee for damages.
  30. Excessive Wear and Tear
  31. The Lessee is responsible for ensuring that the Vehicle is regularly maintained and is kept in good repair. Regular maintenance and repair includes, but is not limited to, the excessive wear and tear provisions below. The Lessee is to pay the costs of regular maintenance and any costs for repairs not covered by warranty.
  32. Excessive wear and tear will include, but is not limited to, the following, even if covered by the Lessee's Insurance Policy:
    1. cracked, damaged, or tinted glass;
    2. dented or damaged body panels, fenders, lights, or paint;
    3. missing equipment or accessories that were provided with the Vehicle, including but not limited to wheel covers, jack, wheel wrench, and spare tire or regular tires;
    4. tires with less than 3mm of tread remaining at the lowest point;
    5. damage to the interior of the Vehicle, including but not limited to dash, seats, floor covering, upholstery, truck liner, and center console (if applicable); or
    6. mechanical damage that affects the safe, proper, or lawful operation of the Vehicle, which would include damage that causes the Vehicle to fail a safety inspection in the state where this Lease is signed.
  33. If the Vehicle has excess wear and tear, there will be a charge to the Lessee for the excess wear and tear.
  34. During the Term, damaged or lost parts, equipment, or accessories may be replaced with items of equal or better quality and construction, and replacement items that meet this standard will be accepted as original items, upon return of the Vehicle.
  35. Returning the Vehicle
  36. When the Lessee returns the Vehicle at the end of the Lease, the Lessee must pay the following amount:
    1. the cost of repairs needed as a result of excess wear and tear.
  37. The Lessee may return the Vehicle at any time during the Lease, by paying the following amounts:
    1. the Monthly Payment multiplied by the number of months remaining in the Term;
    2. the cost of repairs needed as a result of excess wear and tear; and
    3. any outstanding amounts under this Lease.
  38. After the Lessee has returned the Vehicle and paid any required costs and fees, the Lessor will return the following amounts, or the remaining portions of these amounts, to the Lessee:
    1. any money received from an insurance claim or action that is not used to repair or replace the Vehicle.
  39. Realized Value
  40. In this Lease, Realized Value is understood to mean any of:
    1. the price received by the Lessor for the Vehicle at disposition;
    2. the highest offer for disposition of the Vehicle; or
    3. the fair market value of the Vehicle at the end of the Term.
  41. The Lessee will not be held liable for the difference between the Residual Value of the vehicle and its Realized Value.
  42. General Provisions
  43. This Lease may not be assigned to a third party without the Lessor's prior written consent and approval.
  44. This Lease will pass to the benefit of and be binding upon the Lessee's respective heirs, executors, administrators, successors and assigns.
  45. This Lease may only be amended or modified by a written instrument executed by both parties to this Lease.
  46. All costs, expenses and expenditures including, and without limitation, the complete legal costs incurred by enforcing this Lease as a result of any default by the Lessee, will be added to the amount then outstanding and will immediately be paid by the Lessee.
  47. The clauses and paragraphs contained in this Lease are intended to be read and construed independently of each other. If any part of this Lease is held to be invalid, this invalidity will not affect the operation of any other part of this Lease.
  48. If there is a conflict between any provision of this Lease and any form of lease prescribed by applicable legislation of Ohio (the "Act"), that prescribed form from the Act will prevail and such provisions of the Lease will be amended or deleted as necessary in order to comply with that prescribed form. Further, any provisions that are required by the Act are incorporated into this Lease.
  49. Headings are inserted for the convenience of the parties to this Lease only and are not to be considered when interpreting this Lease. Words in the singular mean and include the plural and vice versa. Words in the masculine mean and include the feminine and vice versa.
  50. This Lease constitutes the entire agreement between the parties to this Lease and there are no further items or provisions, either oral or otherwise.
  51. The Lessee is entitled to a complete copy of this Lease. This Lease should not be signed until all terms have been set out and the Lessee has read it entirely.
  52. This Lease will be governed by the laws of Ohio.

IN WITNESS WHEREOF the Parties have executed this Lease dated this _____ day of _____________, 20____.

 

_______________________________
______________________(Lessor)
 

_______________________________
______________________(Lessee)

NOTICE TO THE LESSEE:

(1)  This is a lease. You are not buying the motor vehicle previously described;

(2)  Do not sign this Lease before you read it or if it contains any blank spaces to be filled in;

(3)  You are entitled to a completely filled in copy of this Lease when you sign it;

(4)  Warning -- unless a charge is included in this Lease for public liability or property damage insurance, payment for that coverage is not provided by this Lease.

I do hereby acknowledge receipt of a completed and signed copy of this Lease. ________

Lessee Initials

I do hereby acknowledge receipt of a completed and signed copy of this Lease. ________

Lessor Initials


Itemization of Gross Capitalized Cost

(A) Value of the vehicle as equipped at the time of entering into the Lease ...

 

$1

(B) Values and descriptions of accessories and optional equipment the Lessor agrees to add to the vehicle after entering into the Lease ....................

 


none

(C) Premium to be paid for each policy of insurance .....................................

 

none

(D) Charge for each service contract ..............................................................

 

none

(E) Outstanding Lease balance or prior credit balance  .................................

 

none

(F) Itemization of any other good or service not included above ..................

 

none

     
   
 

(G) Total Gross Capitalized Cost .................................................................

 

$1.00



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Last Updated February 3, 2026

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What is a Vehicle Lease Agreement?

A Vehicle Leasing Agreement is a document that outlines the terms and conditions between a lessor who owns a vehicle and a lessee who leases it for a set period. 

It records details such as monthly payments, the length of the lease, required insurance, and any warranties or purchase options, helping prevent misunderstandings and making the lease terms easier to enforce in the event of a dispute.

A Vehicle Leasing Agreement is also known as:

  • Car lease agreement
  • Vehicle lease contract
  • Motor vehicle lease form

Why Vehicle Lease Agreements are important

A Vehicle Lease Agreement establishes clear, legally binding terms between the lessor and lessee, helping prevent disputes and protecting both parties throughout the lease term.

  • Prevent misunderstandings: Defines payments, lease duration, mileage limits, and end‑of‑term options so both parties know exactly what to expect.
  • Safeguard both parties: Helps ensure the lessor’s ownership rights and the lessee’s agreed‑upon costs, warranties, and purchase options.
  • Clarify risk and liability: Outlines who’s responsible for insurance, maintenance, or damage to avoid unexpected costs.
  • Provide legal proof: Serves as written evidence of the agreement, making enforcement easier if a dispute arises.
  • Keep all key terms organized: Centralizes essential details—such as rates, insurance, and conditions—into a single, clear, accessible document.

Who are Vehicle Lease Agreements for?

Vehicle Lease Agreements are for anyone who wants to lease a vehicle for personal or business purposes. 

In private or peer‑to‑peer leasing situations where no dealership is involved, a Vehicle Lease Agreement can outline rights, responsibilities, and payment details for both sides.

Small businesses or  independent contractorsthat need commercial vehicles can use an agreement to define use conditions, insurance coverage, and wear‑and‑tear.

Common types of vehicles covered in a Vehicle Lease Agreement

Personal

Specialized or commercial

  • Cars

  • SUVs

  • Pickup trucks

  • Vans

  • Semi trucks

  • Box trucks

  • Trailers

  • Farming equipment

For shorter-term use of commercial vehicles and farming equipment, consider using LawDepot’s Equipment Rental Agreement.

Core clauses in a Vehicle Lease Agreement

A Vehicle Lease Agreement should clearly outline the main terms of the lease, such as:

  • Parties, vehicle, and permitted use: Identifies the lessor and lessee by their full legal names and contact details, describes the vehicle (make, model, year, VIN, and condition), and sets out how the vehicle may be used.
  • Lease term and payments: States the lease start and end dates, renewal options, and purchase rights, along with the payment schedule, deposit, interest (if any), and additional costs like taxes or late fees.
  • Insurance and risk of loss: Defines insurance requirements, coverage levels, deductibles, and gap insurance, plus who bears responsibility if the vehicle is damaged, stolen, or written off.
  • Warranties: Notes whether the manufacturer’s or any extended warranty applies during the lease.
  • Use limits and maintenance: Sets mileage limits, permitted or restricted uses, and the lessee’s maintenance obligations—including repairs, record‑keeping, and approval procedures.
  • Return condition: Explains how the vehicle must be returned at lease end, outlining expectations for wear and tear, inspection, and charges for damage or excessive use.
  • Default and early termination: Details what counts as a default (missed payments, misuse, uninsured operation), and how the lease can be ended early, including any costs or residual value adjustments.

How to create a Vehicle Lease Agreement

You can use LawDepot’s step-by-step Vehicle Lease Agreement questionnaire to have your contract in minutes. 

Before you start, gather the key details you’ll need to save time and ensure accuracy, such as:

  • Vehicle details: Make, model, year, and VIN
  • Party information: Full names and mailing addresses of the lessor (owner) and lessee (person or business leasing the vehicle)
  • Financial details: Estimated vehicle value, proposed lease length, and budget for monthly payments

Then, decide the following:

  • Use type: Whether the lease is primarily for personal or business purposes
  • Purchase option: Whether you want to include an option for the lessee to buy the vehicle at the end of the term

Step 1: Vehicle and location

Select the type of vehicle you’re leasing (for example, car, SUV, pickup, or trailer). Then choose the state where the lease will take place so the agreement aligns with the correct governing laws.

Step 2: Use, condition, and details

Indicate if the vehicle will be used primarily for personal or business purposes and whether it’s new or used. Add the make, model, and VIN now or later when finalizing your document.

Step 3: Lessor and lessee details

Specify whether the lessor is an individual or a business and enter the full legal name and address. Repeat the same for the lessee—include accurate legal and contact details for both parties.

Step 4: Lease details

Once the vehicle information is complete, outline all the essential lease details to keep terms clear and consistent:

  1. Warranties and insurance: Confirm whether the manufacturer’s or an extended warranty applies during the lease. Set minimum insurance coverage, maximum deductibles for fire, theft, or collision, and note if gap insurance is required.
  2. Lease term and mileage: Specify the lease duration (e.g., 12, 24, or 36 months) and choose between unlimited mileage or a set annual limit. Indicate if the lessee has the option to buy the vehicle at the end of the term.
  3. Lease cost and fees: Include the vehicle’s current value, projected residual value, and calculated lease amount. Add any administrative or documentation fees, if applicable.
  4. Down payment and lease rate: State whether a down payment is required, enter the amount, and list the lease rate (interest) as a percentage. Check that the total cost before taxes aligns with your budget or return expectations.
  5. Monthly payments and deposit: Apply the correct tax rate to calculate total monthly payments. Indicate if a security deposit will be collected to cover possible damage or unpaid amounts.
  6. Payment schedule and late fees: Set the first payment date (e.g., at signing or the following month), specify whether automatic payments are allowed, and define any late fees for missed payments.

Step 5: Early termination and additional clauses

Determine whether the lessee must pay the difference between the vehicle’s residual and realized values if the lease ends early. Add any custom terms you want to include, such as maintenance rules or driver restrictions. 

Once finished, click Continue to generate and review your completed Vehicle Lease Agreement before printing or downloading.

Talk to a lawyer if you need support with applying additional terms to your agreement or wish to have it reviewed before signing. 

Common mistakes to avoid in a Vehicle Lease Agreement

Small oversights in a Vehicle Leasing Agreement can create opportunities for confusion, financial risk, or even legal disputes. Avoid these frequent errors to keep your lease accurate and enforceable.

  • Unclear vehicle details: Make sure the vehicle’s make, model, year, color, and VIN are listed—missing or vague descriptions can cause ownership and identification issues later.
  • Incomplete payment terms: Clearly show how lease payments are calculated, including taxes, fees, and deposits. Hidden costs or missing totals can erode trust and lead to disputes.
  • Weak mileage and maintenance terms: Define mileage limits (or note if unlimited) and explain who’s responsible for maintenance and repairs to prevent excessive wear and surprise bills.
  • Insufficient insurance coverage: Specify minimum coverage limits, deductible amounts, and whether gap insurance is required, so both parties are protected if the vehicle is damaged or lost.
  • Unclear risk allocation: State who bears the risk of loss, theft, or total damage during the lease—leaving this undefined can complicate claims or early termination.
  • Ignoring warranty terms: Confirm whether the manufacturer or extended warranties apply so everyone understands who pays for repairs.
  • Poorly defined purchase options: If the lessee can buy the vehicle, describe the terms clearly. A vague option may change how the lease is treated for tax or accounting purposes.
  • Missing early termination terms: Explain how early termination works and who pays for any shortfall in value. This prevents major unexpected costs if the lease ends early.
  • Unclear end-of-term rules: Outline what happens when the lease ends—inspection, return, or buyout—to help avoid confusion or disagreement over the vehicle’s condition.

Luckily, the questionnaire for LawDepot’s Vehicle Lease Agreement prompts you for all the important information above, resulting in a comprehensive final draft ready for both parties to sign.

Vehicle Lease Agreement FAQs

What are the lessor's and lessee’s responsibilities?

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The vehicle's lessee is responsible for providing proof of insurance and ensuring the vehicle remains in good condition. 

Meanwhile, the lessor typically handles the initial registration of the leased vehicle, even though it remains in the lessee’s possession. However, state law and the specific lease terms determine who’s responsible for maintaining and renewing the registration throughout the lease. 

The lessor may also bill the lessee for the necessary repairs if they return the vehicle with excessive interior wear, large dents or scratches, or any significant mechanical damage.

What happens at the end of an automobile lease term?

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When a Vehicle Lease Agreement ends, the lessee usually has two options—return the vehicle or buy it if a purchase option is included in the contract. 

The vehicle is inspected for condition and mileage, and any excess wear or overage fees may apply. If the lessee completes the full lease term as agreed, they’re typically not responsible for any difference between the vehicle’s residual value and its actual resale price.

What's the difference between financing vs. leasing a vehicle?

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When you finance a vehicle, you’re taking out a loan to buy and eventually own it outright—each payment builds equity, and you can either keep or sell the vehicle once the loan is paid off. Most financed vehicles would also need a Bill of Sale to record the transaction.

Leasing, on the other hand, means you’re paying to use the vehicle for a fixed period under a Vehicle Lease Agreement. You don’t build ownership during the lease, but you may have the option to purchase the vehicle at its residual value when the term ends.

What is a lease-to-own agreement for a vehicle?

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A lease-to-own agreement for a vehicle is a type of Vehicle Lease Agreement that lets a lessee rent a vehicle for a set period with the option—or sometimes the obligation—to buy it at the end of the term, usually for its residual value. 

This arrangement blends elements of leasing and financing, so it can resemble a conditional purchase contract. Because of this structure, it may have different tax or accounting implications compared to a standard vehicle lease.

What is a residual value on a vehicle lease?

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The residual value on a car lease is the vehicle’s estimated market value at the end of the lease term, determined upfront by the lessor. 

This amount usually serves as the lease-end purchase price, which is the price a lessee would pay to buy the vehicle when the lease expires, before taxes or additional fees.

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