Assuming the balance of an existing car lease (sale, leases)

[uhuru]

I have worked out a deal with an existing lessee to take over the remainder of his lease. It does involve the lessee paying a cash incentive to me.

At this point I have obtained credit approval from the finance company that has the existing lease and the paperwork is being processed to take him off the lease and to make me the new lessee. In the process, I realize that I will be taking on all of the obligations relating to the existing lease.

Here is my issue: the current lessee said that the payment of the cash incentive would not occur until I had assumed the lease - a position that I can certainly understand and I had no issue with it. He obviously did not want to be scammed and then have me not take over the lease obligations.

But I am concerned about taking on the lease obligation and then not being paid the agreed amount. After all, once I sign the paperwork assuming the remainder of the contract, there is no incentive for the current lessee to live up to his side of the bargain.

I am sure this situation is not unique and others have had to deal with it. What is the best way of protecting our respective interests in this transaction? I have met the guy and he seems a decent person. I could have a formal agreement with him which would safeguard my legal position but I don't want to have to go to court to enforce it if he does live up to his side of the deal.

BTW, this is not through one of the sites that specialize in such lease transfers but was as a result of an ad on CL.

Any advice would be appreciated.

[spencgr]

First, this is not Northern Virginia related, so the thread should be moved to the automotive or finance forums.

Second, this can normally be handled by an impartial party holding the money until the terms of the contract are completed. As the lessee is a stranger, and you might not both trust the same impartial person, I would recommend an escrow account via a bank or something like escrow.com. (I have no idea if that particular website is reputable, it was just an example of what is out their as an option.)

[airjay75]

I think the only way to truly protect yourself would be to have a written agreement and have the money placed in some sort of escrow account. Just googled paypal and escrow. Looks like there is a website that paypal works with - escrow.com. Maybe something like that could work, although I don't have any personal experience.

Only other alternative I could think of is ask the seller to pay down the amount of the car loan by the amount of the cash incentive. That way, if the sale doesn't go through, the seller still has the financial benefit. Downside with that is that the cash is no longer liquid but tied up with the car.

At a minimum, I would demand a written agreement. No way would I take the seller's word for it.

[uhuru]

Thanks for the response.

I did not realize there was a car forum. I posted it here because I happen to live in the area.

Mods please move this to the appropriate forum. My apologies for having posted it on the wrong forum.

[car54]

How about have the guy meet you at the signing with a certified check or cash?

[uhuru]

Originally Posted by airjay75

I think the only way to truly protect yourself would be to have a written agreement and have the money placed in some sort of escrow account. Just googled paypal and escrow. Looks like there is a website that paypal works with - escrow.com. Maybe something like that could work, although I don't have any personal experience.

Only other alternative I could think of is ask the seller to pay down the amount of the car loan by the amount of the cash incentive. That way, if the sale doesn't go through, the seller still has the financial benefit. Downside with that is that the cash is no longer liquid but tied up with the car.

At a minimum, I would demand a written agreement. No way would I take the seller's word for it.

Yes, the escrow is a possible option though it would involve more paperwork, etc but that may be worthwhile to safeguard both parties.

I like the idea of the seller paying the finance company (the lessor) the amount agreed because it would safeguard him and also make sure that I get what is due. The non-availability of the cash is less of a factor since my future obligations would be reduced which is what matters to me.

Originally Posted by car54

How about have the guy meet you at the signing with a certified check or cash?

I would not accept a certified check but cash is a viable option except for one problem. The lease does not transfer until I send the signed agreement in my name to the lessor. At that point, I am obligated on the lease. So I'd need the cash before I sent the signed documents to the lessor which means the current lessee would need to take it on faith that I would follow through after getting the cash.

I know that leases get transferred quite frequently - so this is not a unusual event. I was wondering how anyone who had been through the experience had handled a situation where a cash incentive was being paid.

[spencgr]

Originally Posted by uhuru

I would not accept a certified check but cash is a viable option except for one problem. The lease does not transfer until I send the signed agreement in my name to the lessor. At that point, I am obligated on the lease. So I'd need the cash before I sent the signed documents to the lessor which means the current lessee would need to take it on faith that I would follow through after getting the cash.

I know that leases get transferred quite frequently - so this is not a unusual event. I was wondering how anyone who had been through the experience had handled a situation where a cash incentive was being paid.

Sign the agreement and hand him the envelope to mail it. Then he hands you the cash. He knows it will be sent in because he will be sending it.

[smarterguy]

Ha, sounds like a lot of work. And the lease take-overs I've looked at never seem to be a good deal. Either a very high payment or only a few miles left, with a still high payment.

[uhuru]

Originally Posted by spencgr

Sign the agreement and hand him the envelope to mail it. Then he hands you the cash. He knows it will be sent in because he will be sending it.

Yes, this may work. It is something that I will broach with him. It will take about 7-10 business days for the whole process to be completed.

It would still mean the keys and the possession of the car would need to wait until the lease is registered in my name but that is more of a formality I would think involving meeting him to take care of it.

Originally Posted by smarterguy

Ha, sounds like a lot of work. And the lease take-overs I've looked at never seem to be a good deal. Either a very high payment or only a few miles left, with a still high payment.

It varies .... I have seen some great deals and others that are lousy. I think it can be a win-win situation for both parties under the right circumstances.

In this instance, this is a car that my wife has wanted for a while. I am more ambivalent about it but here is a situation where there is about a year left on the lease. So she can try it out and if she likes it can enter a lease on another similar car ....... and if she does not like it, then we just turn it in after a year. If she really likes it, she can buy it at the residual. Obviously the pricing on the lease is better than we would get if we entered a new lease.

[smarterguy]

Originally Posted by uhuru

It varies .... I have seen some great deals and others that are lousy. I think it can be a win-win situation for both parties under the right circumstances.

In this instance, this is a car that my wife has wanted for a while. I am more ambivalent about it but here is a situation where there is about a year left on the lease. So she can try it out and if she likes it can enter a lease on another similar car ....... and if she does not like it, then we just turn it in after a year. If she really likes it, she can buy it at the residual. Obviously the pricing on the lease is better than we would get if we entered a new lease.

Yeah, I've looked in to lease-take overs for that very reason. But still couldn't find a deal that didn't seem like that owner was just leave me a car with only a few hundred miles left to drive. I guess there are deals out there though. Good luck...