In our series of articles on car leasing we have already talked about the particularities of the car leasing contract, paying special attention to the twelve details to observe in the “fine print” that can avoid more than one disappointment. Today we will focus on those parts of the contract that guarantee the flexibility for the company or the self-employed person who opts for this vehicle leasing formula that offers them many economic advantages.
Leasing companies design the contracts so that they are fulfilled in all their terms. He residual value it is calculated for the exact expiration date of the specific contract of each vehicle, since the expectations of the used market show significant differences at the changes of the year and even throughout a year.
He contract mileage is the determinant of maintenance costs. There will always be differences between the agreed kilometers and the real ones, which will be settled at the end of the contract, but possible significant differences may force the economic terms of the contract to be modified.
He term It is also decisive in other aspects such as the financial cost, the tax burden on vehicles or the additional cost of maintenance. For this reason, all leasing contracts contemplate conditions such as penalties for non-compliance, negligence in the use of vehicles and conditions for the modification of the initially agreed terms.
Although in principle it can be understood that these are extraordinary circumstances, reality indicates that they occur in a percentage between 10 and 20% of contracts. The economic impact of these situations is not included in the monthly fee, so it is essential to identify the application conditions and calculation methods provided for in the contract. Among them, the following should be highlighted, due to their greater economic impact:
- early cancellations: if the client wishes to interrupt the contract before the expected completion, he will be penalized according to a formula defined in the contract. The definition of this formula is very diverse among operators, so its application will mean different amounts.
- Mandatory contract modifications: if the mileage actually traveled by a vehicle exceeds the agreed by a certain percentage, a new monthly fee will be calculated. The percentages and calculation methods defined in the agreement of each operator are different.
- Formal and informal extensions: the client may request an increase in the term initially agreed or a formal extension of the contract, which will mean a variation in the monthly fee. If the customer does not return the vehicle on the day initially agreed, the contract enters into a formal extension, which may mean an automatic increase in the monthly fee.
- negligence of use: If a vehicle breaks down as a result of its improper use, such as in a sports competition, the repair costs will be passed on to the customer. Among other legal aspects, it is convenient to review whether the damage assessment procedures allow the customer to take the necessary actions for their legal defense (counter-expertise).
