If you`re in the market for a new vehicle, it`s important to understand the various leasing options available to you. One type of lease that is gaining popularity in recent years is the trac lease. In this article, we`ll provide you with a sample trac lease agreement and explain what this type of lease entails.
What is a Trac Lease?
A trac lease, short for Terminal Rental Adjustment Clause lease, is a type of leasing contract that is commonly used for commercial vehicles. Under a trac lease agreement, the lessee is responsible for making lease payments based on the difference between the vehicle`s initial cost and its estimated residual value at the end of the lease term. This residual value is determined at the beginning of the lease agreement.
At the end of the lease term, if the actual residual value of the vehicle is higher than the estimated residual value, the lessee is entitled to a refund of the difference. However, if the actual residual value is lower than the estimated residual value, the lessee is responsible for the difference in value.
Sample Trac Lease Agreement
Below is a sample trac lease agreement that outlines the terms and conditions of the lease:
1. Parties. This lease agreement (“Agreement”) is entered into on the date stated herein by and between [Lessor], whose address is [Lessor`s Address], and [Lessee], whose address is [Lessee`s Address] (“Lessee”).
2. Leased Property. Lessor hereby leases to Lessee the following described property (the “Equipment”): [Equipment Description].
3. Term. The term of this lease shall commence on [Commencement Date] and shall expire on [Expiration Date], unless earlier terminated in accordance with this Agreement.
4. Rental Payments. Lessee agrees to pay Lessor rent in the amount of [Rental Amount] per [Rental Period] (the “Rent”) for the use of the Equipment during the term of this Agreement. Rent shall be payable in advance on the [Payment Date] of each [Rental Period].
5. Terminal Rental Adjustment Clause. This lease is a trac lease, and any adjustments required by the Terminal Rental Adjustment Clause shall be made at the end of the lease term.
6. Maintenance and Repair. Lessee shall maintain the Equipment in good repair and working order, at Lessee`s own expense, throughout the term of this Agreement.
7. Return of Equipment. At the expiration of the term of this Agreement, Lessee shall return the Equipment to Lessor in the same condition as when received, ordinary wear and tear excepted.
8. Default. If Lessee defaults in any of the terms or conditions of this Agreement, Lessor may terminate this lease and take immediate possession of the Equipment.
9. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of [Governing Law].
Conclusion
A trac lease agreement is a popular option for those looking to lease commercial vehicles. The sample agreement above outlines the terms and conditions that are typically included in this type of lease. Before signing any lease agreement, it`s important to carefully review all the terms and conditions to ensure that you fully understand your rights and obligations.