Minnesota Attorney General Lori Swanson defines leasing as the long-term rental of a car, usually anywhere from two to four years. The attorney general also notes that leasing can be less expensive in the short-term, but continued leasing can potentially cost the lessee more than buying. Any lessee in Minnesota must possess a valid driver's license, as well as automobile insurance.
Payment Agreement
According to the Minnesota Statutes, when signing the lease agreement, the lessee of the automobile agrees to pay the recognized value of the automobile minus the manufacturer's rebates, residual value of the vehicle and worth of the automobile the lessor takes as trade from the lessee.
Lease Tax
At the time the lease is signed, the lessor collects a Minnesota-imposed tax on the automobile in full. If the lease can be renewed, the lessor receives the tax upon the signing of the initial term of the lease and each subsequent renewal term of the lease. It is the lessor's right to request the amount of tax due to him or her if a lease is canceled within 90 days or upon an automobile's return to the manufacturer due to safety or deficiency issues.
Registering
In order to register a leased vehicle, the lessee of a leased vehicle must show either the leasing agreement or power of attorney directly from the leasing company. The lessee also must present his Minnesota tax identification number.
Accidents
If the lessee is involved in a car accident or faces minor car trouble, the lessee is responsible for paying for the damage out-of-pocket. In the case of a serious car accident that damages the car to the point of complete damage, the lease will be immediately canceled and the lessee is responsible for paying the remainder of the lease without the vehicle.
Tip
If a lessee does total his leased car, his car insurance should be able to pay for the cost of repairs. To avoid having to pay the remaining cost of the lease, a lessee should purchase "gap insurance" when leasing the car.
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