Our Blogs — Page 9

Introduction:

Lease-to-own automobile programs are a growing phenomenon in providing a convenient and affordable means to own a car. Quick Lease is one of the largest car leasing businesses, specializing in straightforward and customer-centric auto lease to own plans.

Common Reasons for Missed Payments:

Missing a payment in a lease-to-own deal is possible for many reasons. Although some can be unavoidable, it is possible to prevent others by identifying the underlying causes.

1. Financial Strain:

Emergencies, loss of employment, or decreased income may prevent one from keeping up with monthly payments.

2. Forgetfulness or Overlooking Due Dates:

Busy lifestyles and failure to remind oneself might cause due dates to be overlooked.

3. Misinterpretation of Contract Terms:

There are customers who fail to comprehend the payment schedule or due dates specified in the agreement.

Consequences of Missing a Payment INSTANTLY:

When a payment is overdue, the leasing company usually starts a chain of steps to resolve the situation. These actions are implemented to safeguard both the customer and the firm and stimulate resolution.

1. Late Payment Fees:

The majority of lease-to-own agreements contain a late payment penalty clause. The fees may be from a flat rate to a percentage of the monthly payment.

Example: A late payment of AED 2,000 can attract a late charge of AED 200, as specified in the contract.

2. Suspension of Services:

In other instances, other services like maintenance, roadside assistance, or insurance cover can temporarily be put on hold until payment is completed.

3. Effect on Credit Record:

Although lease-to-own contracts do not necessarily include normal credit checking, late payments can nevertheless deter your financial history, particularly if sent to credit bureaus or financial organizations.

Long-Term Consequences of Ongoing Late Payments:

If missed payments continue without remedy, the penalties increase and can result in legal action or loss of the vehicle.

1. Contract Cancellation:

Continuous missed payments can result in cancellation of the lease-to-own agreement. This entails the customer losing the option to buy the vehicle and forfeiting any equity gained through past payments.

2. Repossession of the Vehicle:

It is within the right of the leasing company to repossess the car if the payments are not made as per the agreement. Repossession is generally a last option but may be undertaken if the customer does not respond to notifications or make alternative arrangements.

Repossession Procedure:

- Formal notice is given.

- Grace period can be given.

- Vehicle is collected by licensed personnel.

- Customer could be held responsible for repossession expenses.

Customer communication and resolution are highly valued by Quick Lease before invoking repossession processes.

3. Loss of Down Payment and Equity:

Any down payment made initially or earned equity through monthly payments can be lost if the contract is canceled due to non-payment.

Conclusion:

Lease-to-own automobile schemes present a great chance for UAE residents and expatriates to own cars with flexibility and affordability. However, meeting timely payments is crucial to retaining the advantage of the contract and preventing grave consequences.