Trading in a leased car for a new lease? Here's what you need to know
While vehicle leasing is less popular in South Africa than it is in other parts of the world, some road users have opted for this personal mobility option. What happens when you trade your current lease for a new one? Let's find out.
What is vehicle leasing?
Vehicle leasing is where a consumer pays a monthly premium to use a vehicle for a pre-determined amount of time with set mileage restrictions and other contractual limitations. This is a long-term vehicle rental scheme where the vehicle must be returned after a set amount of time. Some leasing contracts will offer the consumer the option to purchase the vehicle after the lease period expires, while many will simply offer you a new vehicle with a new lease agreement.
Why leasing?
Leasing appeals to many because it means that they can often get a more expensive vehicle for a lower monthly premium should the lease be relatively short-term. The lessor also does not have to worry about insurance or selling the vehicle when the term is over. The deals are structured so that a consumer can trade up for newer vehicles more often and the deal can be structured to include extras and maintenance costs. Leasing also makes sense for the nomadic amount us, those that move frequently and do not want the hassle of being tied to a vehicle finance agreement, with the flexibility of a lease being more appealing.
Trading your lease in for another lease
A typical lease agreement can last for between three and four years, after which the lessor returns the vehicle, where they will then be offered a new vehicle or another contract that suits their budget and lifestyle at the time. This is a very simple process, however, should you want to end a lease early, you may incur penalties, meaning that it may be better to wait until your lease is up before considering that upgraded lease you've had your eye on.
