Chazm Launches Long-Term Rental "Contract Transfer Service," Helping Users Switch Vehicles as Needs Change

"Connecting customers from contract signing through use and contract transfer"

Design & Practice, a mobility fintech company that operates the automobile leasing and rental platform Chazm, announced on October 13 the launch of a “contract transfer service” that allows long-term rental contracts to be transferred to another user.

Image of the newly launched Chazm long-term rental transfer service by Design & Practice, a mobility fintech company that operates Chazm, an auto leasing and rental platform. Design & Practice

Contract transfers play a role similar to used-car transactions in the long-term rental and leasing market. Unlike used-car sales, in which vehicles are bought and sold, a transfer involves handing over both the vehicle used by the current customer and the remainder of the rental or lease contract. The current customer can transfer the contract instead of terminating it early, while the new customer takes over use of the vehicle under the remaining contract period, monthly payments and end-of-term conditions. If the current customer offers a “transfer incentive” to facilitate a quick transfer, the new customer can reduce the effective cost of using the vehicle.

Long-term rental and lease contracts typically run for three to five years. During the contract period, changes in circumstances—such as having a child, changing jobs, moving or being assigned overseas—can alter the type of vehicle a customer needs or whether they need a vehicle at all. However, early termination fees for some long-term rental and lease products can amount to 20% to 40% of the remaining payments, making it difficult for customers to change how they use a vehicle when their circumstances change.

Chazm said it has applied to contract transfers the approach it has used to standardize and compare the prices and contract terms offered by different financial institutions and rental car companies. The service provides vehicle photos, accident history records and information on the vehicle’s condition submitted by its owner. It displays key contract terms at a glance, including the financial institution, monthly payment, remaining contract period, mileage and end-of-term purchase price. It also provides a cost comparison with leasing or renting the same model new or buying it used with an installment loan, and explains the differences between purchasing and returning the vehicle at the end of the contract.

Listings for contract transfers can be found in the “Used Vehicle Transfers” section of the “Find a Vehicle” tab in the Chazm app. The service currently supports transfers of long-term rental contracts, with lease transfers to be added in stages.

Customers who want to take over a vehicle can apply for a transfer after reviewing its condition, key contract terms and any transfer incentive. Chazm provides step-by-step guides and transaction tools, including a secure transaction account, to help customers complete the transfer process. The final transfer approval and contract terms are determined through the review and transfer procedures of the relevant financial institution or rental car company.

For current customers, Chazm reviews the vehicle and contract terms, suggests an appropriate transfer incentive and helps list the vehicle. It also helps connect them with prospective customers who are more likely to complete a transaction based on a preliminary review, and guides them through the steps required to complete the transfer.

To reduce the risks associated with direct transfers between the parties, Chazm uses a secure transaction account to handle payments. The transfer incentive is first applied to the amount due when the vehicle is taken over, and any remaining amount is paid to the new customer after the transfer is confirmed as complete.

Chazm’s transfer service is available only for long-term rental contracts entered into through Chazm. Listings can be posted starting three months after the vehicle is delivered. Individual customers can either transfer a contract or take one over, while corporate customers can only transfer existing contracts.

Chazm plans to gradually expand the number of participating financial institutions and eligible contracts.

“The way customers use a vehicle can change not only when they sign a contract but also while they are using it,” said Jeong Sangyeon, chief executive of Design & Practice. “Chazm will grow into a platform that supports customers beyond the moment they sign a contract, throughout the process of using and changing their vehicles.”

Meanwhile, Chazm continues to grow, with the number of contracts signed in the first half of this year rising approximately 5.8-fold from the same period last year. As of the end of last month, cumulative registrations had surpassed 850,000. The company currently partners with 17 financial institutions and rental car companies to provide comparison and brokerage services for leases and rentals.

This content was produced with the assistance of AI translation services.