Sometimes commitment is hard. Sometimes a few years into something you decide that you may have made a mistake. Maybe it’s the shiny new model down the street. Maybe your first love just didn’t age well and needs a whole lot of work. Maybe you are looking lustfully at the neighbor’s automobile wondering what it might take to simply take over their lease. Whatever the reason, you don’t have to be married to your car lease any longer. There are ways to get out of it, legally and safely, and there are ways to take over someone else’s lease if you are so inclined.
So, let’s assume you have been itching to get out of your current automotive, uh, situation. The ugly want-demon rears its head every time the car of your proverbial dreams rolls by. There’s a way to nip it in the bud but it takes a little work.
First, you need to find out how much your car is worth. Check out Edmunds.com or Kelley Blue Book to determine just how much your car could fetch in its current state. Look it up by year, make and model and be honest about the condition of your car—it doesn’t pay to delude yourself about the state of your affairs. Also—it’s a good idea to consider the lower number as the realistic value of your used but unwanted leased car. It will help save you from any unexpected disappointment and leave you pleasantly surprised if you get more.
Next, pick up the phone. Call your lender or bank and find out how much you have remaining on your docket. Don’t be surprised or worried if the payment they quote you is different from what your last balance statement says. That’s perfectly normal as interest accrues over a set period of time (usually daily).
Ask about the process for transferring a lease. Some banks don’t allow it at all and you’ll be stuck in your current situation for the duration of the contract. Also know that there are some risks to transferring your lease to someone else. In some cases you will continue to be held responsible for any kind of mileage overages or unpaid balances. It makes sense to speak to the bank that holds your lease to find out what the particulars of your situation may be. There’s also a risk that if the person assuming the lease defaults on that loan, the bank may come after the original lease holder—you—for the money. Just check with your bank to see what potential pitfalls there may be in your situation. You’ll need to be comfortable with potentially retaining some of the responsibility for your unwanted car well after you’ve passed it along to someone else.
While you are on the phone get all the information you might need including what kind of paperwork they need to ensure that the lease transfer goes smoothly. If your loan is held by a local bank or a credit union in your town it’s best to try and hold the sale at the bank or the dealership so that when the transaction goes down you can easily transfer the lease to the new owner. It will also give a formality to the sale, and the bank or dealership will have all the documents you need and a notary there to formalize it all.
Now comes the tricky part—finding a willing buyer. Lease swaps are becoming more and more common nowadays so it’s not that difficult to do. Your best bet is to list your unwanted vehicle on Instamotor and have the buyer come to you. There are other sites out there as well (Swapalease, LeaseTrader, LeaseCompare, etc.), too. You can also let your dealership know that you are looking to get out of your lease and they can be on the lookout for potential buyers as well. Be sure to research each platform’s requirement for selling your car whether you are going with a brick and mortar or an online retailer. When you list your vehicle, be sure to disclose the fact that you still have remaining lease payments on the car so that your potential buyers know what they are in for.
Once you’ve found a buyer and put all the paperwork in order, you’ll need to get your buyer a temporary operating permit from your local DMV which will allow them to take possession of and legally drive your car. The person assuming your lease will assume a brunt of the fees that go along with transferring a lease so plan for that as well. Keep all relevant paperwork and be sure to follow up with the buyer to ensure that they have done all the relevant pieces of the work as well. Finally be sure to take your car off your insurance once the deal is done.
Taking over someone else’s lease is still complicated but less so than it is if you are getting rid of a no-longer-wanted-vehicle.
First you need to find someone willing to sell you their lease at a good price. Again, you can use the sites mentioned above or you can visit dealerships and let them know that you are looking to assume a lease on a car. They’ll be able to put it out to their network and potentially find you a good deal.
Once you’ve located a seller or dealer, it’s time to get all your ducks in a row. This means that you need to know everything there is to know about the original lease. What is the exact and specific legal agreement as it’s written in the contract? Do you understand what it means for you and your credit? What about what it means for the seller and their credit? Check to see if the lease will continue past the warranty period and if there is a lease termination fee at the end of the loan. Find out what the exact terms of the lease are and be aware. Ignoring any of these things could cost you lots of money down the road so you need to be sure you’ve done your due diligence.
Next, have the car you have agreed to buy inspected by a certified mechanic. Want to know why it’s so crucial to have your car looked at before signing on the dotted line? Read the details in our article, here.
You should also do your homework about the car itself. Find out how many miles are on the odometer and know that most leases are for just 12,000 miles per year. If you are looking at a 2-year-old car and it has more than 24,000 miles on the odometer you could be on the hook for as much as $0.15 per mile over that limit that you may go. You should also inspect the car for paint chips or dents that you may be held responsible for when you turn the car back into the dealer at the end of the lease. It’s also worth pulling the vehicle history report as well. Need help understanding it? Check out our post here.
Also know that you will have your credit run if you are taking over a lease—whether you are doing it through a service or not. The bank holding the loan will require it so be sure that you have your financial ducks in a row before you go through with a transaction like this. The good news is that you will be given the same lease terms as the current owner so you won’t be subject to a tiered pricing like you would if you were buying or leasing the car brand new.
Once you have done all your homework and had the car inspected by a certified mechanic it’s time to get the paperwork done. The best place to conduct business is at the dealer or at the bank that holds the lease. That way all the paperwork is readily available and can be notarized immediately. Just like the seller, you’ll need to ensure that you are legally able to drive the car by taking the bill of sale to the DMV and getting a temporary operating permit. You’ll also need to put your new car on your insurance and make sure that the leasing bank has your address on file so that they can send you the monthly bills going forward.
Whether you are looking to get out of your no longer wanted car, or looking to find a great deal on a short-term lease, lease swapping is definitely the way to go. While the transaction process is a bit more complex than other kinds of transactions it can be done. Be sure to do your due diligence no matter which side of the table you sit on and always get all your paperwork in order. In the long run it will pay off.
Not your typical used car salesman. Our team is here to provide honest and transparent advice about car buying and selling.