Lease Buyout refers to the term when the leased property is bought either subsequent to the expiration of lease or before it expires (an early buyout). The lease can either be paid off in cash or a loan may be taken to finance the lease buyout. The chief cause to buyout a lease is because the client wishes to keep the property longer than the term of the lease as it has served the person well.
At the end of leasing period, if the client wishes to purchase the property, the following steps are to be followed.
- Firstly, the market value of the asset is to be determined. If the market price is equivalent to or more than the outstanding value of the asset, it is reasonable to purchase it after the lease expires.
- Leasing company or the dealer is to be contacted about the buyout options available and a fair price for the property is to be bargained.
- The buyout needs to be finances and the client must secure a source of finance. Selecting a loan outside the dealership can often save a lot of finances for the client.
So the content on the lease buyout agreement must emphasize on certain points. The lease buyout also needs to be approved by the commercial law of the region and vastly depends upon the local policies. The lease buyout agreement should definitely include the clauses under which the property is being handed over to the buyer, the price that has been fixed for it and the consent signature of both the parties. By following the guidelines, the lease buyout process can be facilitated to a great extent.