Car Lease Refinancing

Written by Jeremy Horelick
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Why would a customer choose to refinance his or her lease if there's no ownership issue at stake in the first place? For one thing, that customer may still find a better interest rate on monthly payments through another party whether it's a lease or not. For another, many customers who lease do in fact wind up buying their vehicles.

One reason lessees become owners is that they already have a history with their vehicles. They know, for instance, about any mechanical problems the car may have had as well as accidents that have hindered its performance. One of the reasons used car buying is often cheap is that the purchaser is shouldering the full risk of an unknown entity. He or she expects to be compensated for this via lower rates. But with leasing to own, there's no risk involved whatsoever.

When Good Dealers Go Bad

Quite often, a dealer is onboard with a customer only so long as he or she is a lessee who's bound by contract. Once that lessee indicates a willingness to buy out the remainder of the lease, however, some dealers turn their attention elsewhere--namely, to more profitable customers. After all, a dealer can often get more money by repeatedly leasing out a vehicle than by selling it outright.

The upshot of this is that once you're ready to make the buyout, it may be that your dealer has no financing plan in place for you. You must now find a competitive lender who can give you the terms you know you can afford. In such instances, the new lender may assume the dealer's debt, then work with you to figure out the most reasonable schedule for making repayments.

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