'Skip the penalty — transfer your contract': Chazm launches long-term rental succession service

A new service now allows long-term rental customers to transfer both their vehicle and contract to another person even when time remains on the agreement — offering an alternative to steep early-termination fees for those whose circumstances have changed due to childbirth, a job change or an overseas posting.

Design & Practice, the operator of the car lease and rental platform Chazm, said Tuesday it had launched a long-term rental contract succession service.

Under the succession model, an existing customer hands off both the vehicle they have been driving and the remaining rental contract to a new user. Unlike a standard used-car transaction — which involves buying and selling the vehicle itself — a succession transfers the monthly payment, remaining contract term and end-of-term conditions as they stand.

Long-term rental and lease agreements typically run three to five years. Mid-contract, however, a growing family, a move or a job change can leave a customer no longer needing the vehicle or wanting a different model. Early termination is rarely straightforward: on some products, cancellation fees run to 20 to 40 percent of the remaining payments.

Succession offers a way to ease that burden. The original contract holder can hand over the vehicle instead of canceling early, while the incoming user takes over a contract whose terms are already known. If the original holder offers a separate succession support payment, the new user's cost can be reduced further.

Chazm has consolidated the relevant information in one place so users can assess the economics of a succession deal. Listings show vehicle photos, accident history and current condition alongside the financing company, monthly payment, remaining contract term, mileage and end-of-term purchase price.

The platform also shows how the cost compares with taking out a new lease or rental on the same vehicle or buying it on a used-car installment plan. Users can also review the conditions for purchasing or returning the vehicle at the end of the contract.

Chazm has added features to make transactions more secure. Financial exchanges — including succession support payments — are handled through Chazm's escrow account. Support funds are applied first against any amounts to be settled during the succession process; any remainder is released to the new user only after the contract transfer is confirmed.

For customers looking to hand over their vehicle, Chazm reviews the contract terms and vehicle condition, suggests an appropriate support payment amount and assists with listing the vehicle. New users can browse available listings under the "Used Succession" tab in the app's "Find a Vehicle" menu and submit an application. Final approval, however, rests with the financing company or rental car company.

The service is initially available only for long-term rental contracts concluded through Chazm. A vehicle must have been delivered at least three months before a succession listing can be posted. Individual customers may both transfer existing contracts and take over new ones; corporate customers may only transfer their existing contracts to other users.

Chazm plans to expand the pool of partner financing companies and eligible contracts, and to introduce lease succession on a rolling basis.

"The right way for a customer to use a car can change not only at the time of signing but throughout the period of use," said Jung Sang-yeon, chief executive of Design & Practice. "Chazm will grow into a platform that goes beyond the moment a contract is signed to accompany customers through the entire process of using and changing their vehicle."

Meanwhile, Chazm's contract volume in the first half of this year rose roughly 5.8 times compared with the same period last year. As of September, the platform had surpassed 850,000 cumulative registered users and currently partners with 17 financing companies and rental car firms to offer vehicle lease and rental comparison and brokerage services.