Who Ultimately Owns the Vehicle in an After-Sale Leaseback?
3 Answers
In an after-sale leaseback, the vehicle ultimately belongs to the lessee. Here are the relevant details: 1. Contract Stipulations: Generally, upon lease expiration (after payment of the equipment buyout price and the final rental installment), the lessor is considered to have fully fulfilled all contractual obligations. At this point, the lessor should issue a "Certificate of Ownership Transfer" to the lessee within one week, transferring ownership of the leased asset to the lessee. In other words, ownership of the asset should then belong to the lessee. 2. Article 12, Section (1) Provisions: The lessor may terminate the contract and, in accordance with Article 97 of China's "Contract Law," demand compensation from the lessee for losses incurred due to the inability to return the leased vehicle.
I met a guy in the used car business who did a sale-leaseback deal. Last year when he needed cash flow, he sold his own Highlander to a leasing company and signed a three-year lease to keep driving it. According to the contract, when the lease ends, he only needs to pay 5% of the residual value to get the car back. He did the math - the total lease payments over three years roughly equal the car's depreciation, and he'd only need to pay about ten grand at the end to keep ownership. The key is checking if the contract has a purchase option clause clearly stating the owner's priority to buy out after lease term. Some shady companies bury traps in contracts, setting artificially high residual values or adding hidden fees to force you to forfeit ownership. If you make all payments on time during the lease, there's a 99% chance the car will be yours in the end - same principle as paying off a mortgage and keeping the house.
I previously worked at a financial company and specialized in handling automotive after-sale leaseback cases. This model essentially involves the car owner selling their vehicle for cash and then leasing it back for continued use. During the lease period, ownership clearly belongs to the leasing company as stipulated in the contract. However, it's hard to predict who ends up with the car when the lease concludes—I've seen countless such cases. If the customer makes all lease payments on time and pays a small fee for the transfer procedure at the end, the car naturally becomes theirs. But if they default midway or refuse to pay the residual value at maturity, the leasing company rightfully repossesses and auctions the vehicle. Honestly, many leaseback contracts nowadays include flexible clauses letting you choose between purchase or return at maturity. If the owner opts for the purchase option, pays the final installment, and signs the transfer documents, the vehicle title reverts to their name.
