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Taking Over a Car Lease: How, Why, & The Best Options To Consider

Last updated: August 27, 2021
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a vector image of a hand holding a car lease and another hand taking over a car lease with a road and car in the background

Leasing a car can be a valuable alternative to buying a new car.

But if you want a deal, taking over a car lease can be even better.

When it comes to buying and leasing, both need the leaser or buyer to make monthly payments, a lease requires a shorter commitment.

That makes it an excellent way to assess the merits of the car under lease.

If you’ve never leased a car before, the process can seem overwhelming.

With that in mind, a lease transfer can be a good way to familiarize yourself with the leasing process.

What is a Lease Transfer? An Overview of Taking Over a Car Lease

When you undertake a lease transfer, the leased car moves from one owner to another.

Whoever inherits the car lease also inherits:

  • Monthly lease payments
  • Conditions of leasing
  • Vehicle running costs

Why People Transfer Leases

There are various reasons a person might seek to transfer a lease. These include:

  • Altered financial situation
  • Change in family circumstances or situation
  • Want to lease a new/different car

Whatever the reason for transferring the lease, the way you transfer a car lease remains the same.

Basics of Car Leases

When you set out to lease a car, the first thing to check is manufacturer-specific lease deals.

These are leases specific to certain car types, such as Honda, BMW, or Toyota.

This can be an excellent option for people keen to get a new car every two to three years.

It’s also popular with people who are unsure if they want to commit to a certain make or model of vehicle.

The other thing to check is the lease deals in your area.

These may impact the car you choose to lease and who you lease it from.

Even if you can’t find a lease for the car you want, it may be possible to establish a leasing agreement with the dealership.

But, to do this, you must understand what is and isn’t negotiable.

When arranging a lease, you can negotiate for:

  • Capitalized cost
  • Trade-in value of the vehicle
  • Interest rate

You cannot debate:

  • Car’s residual value
  • Bank/administration fee

While interest rates and aspects of pricing can be negotiable, your credit score affects the negotiation outcome.

But it’s also not unusual for a dealer to mark up the interest in a lease to gain more profit.

So, provided your credit rating is good, you can always negotiate to pay a lower rate of interest.

How Does Auto Leasing Work?

When you sign a car lease, you agree with the existing lease-holder that you will drive the car for the remainder of the lease.

And while it’s possible to lease a used car, it’s more usual that you will come away with a lease for a new car.

So, your monthly payments cover the depreciation of the vehicle as it accrues miles.

Even when these fees combine with interest, car leases can still cost less in the long run than auto loans or the outright purchase of a new car or leased vehicle.

Moreover, many leases often give you the option to buy the leased car at the end of the lease using:

  • Cash
  • Loan
  • Lease buyout

Besides determining your monthly payments, deposition cost, and other monetary details, an auto lease restricts your use of the car.

If you are leasing or taking over a car lease, look for provisions and/or restrictions on:

  • Early termination
  • Excessive wear
  • Maintenance
  • Mileage charges

Because you are leasing, not buying the car, you will be unable to customize it as you might your own vehicle.

Finally, when the lease ends, you have three options.

You can:

  • Trade in the vehicle
  • Walk away
  • Buy the car

If you transfer the lease into your name before its termination, then you, and not the original leaser, make this decision.

Car Lease Takeover

Taking over a car lease can be an ideal way to solve a short-term need for a car without committing to the expense of a full purchase or obligation of a newly leased vehicle.

But transferring a leasing agreement isn’t without attendant considerations.

Factors to Consider

There are various factors to consider when agreeing to transfer a car lease, including:

  • Mileage limits
  • Vehicle cost
  • Additional lease transfer fees

All these have the potential to combine and raise the cost of the interest or monthly payments you inherit from the original leaser.

Mileage

Many car leases have a mileage maximum that you cannot exceed while driving the vehicle.

When transferring the car lease, make sure to check both the mileage cap and the number of miles accrued.

Otherwise, you risk paying for exceeding the mileage limit agreed in the lease.

The average cost for excess mileage is approximately 15-20 cents per mile.

It’s also possible to negotiate with the lender over the cost of excess mileage.

Often, leaseholders will offer cash incentives that cover the cost of exceeding the mileage cap if the leased car has a high mileage value.

Vehicle Condition

Another thing to consider when taking over the original lease is the provisions made for the vehicle’s condition.

What a dealership considers excess wear varies but many car leases stress:

  • Scratch size
  • Tire tread depth

Since you undertake all maintenance for the car when using the lease contract, having a working knowledge of what the leasing agent considers reasonable conditions is vital.

Additional Costs

Taking over a car lease means more than taking over the monthly payments, down payment and upfront deposits.

Some states tax lease transfers on leased cars the same way they tax bought vehicles.

Before agreeing to a car lease transfer, find out if this is the case in your state.

If so, you’ll want to calculate how much tax you would be responsible for and when you needed to pay it.

The other consideration is car insurance and coverage.

Since you are taking over the remainder of the lease, many insurance companies ask you to take out comprehensive collision coverage on the leased car.

You will also need personal liability coverage.

Nor are these the only costs you may encounter.

In addition to tax and insurance costs, you may also experience:

  • Lease transference fees
  • Charges for running a credit check
  • Disposition fees

Provided you’re aware of the potential charges you could incur, taking over a car lease can be a satisfying experience. Many people even find it beneficial.

Pros of Car Lease Takeover

That said, taking over a car lease still has its advantages.

These include:

  • Saves more money than buying a new vehicle
  • Short-term commitment
  • Mileage restrictions guarantee lower mileage than buying a used car

Cons of Car Lease Takeover

Still, some negatives need careful evaluation if you’re thinking about taking over a car lease.

These include:

  • Difficulty finding low-mileage cars for lease swap
  • Potential sales tax
  • Charges for undetected damage
  • Savings limited compared to taking out a new car lease

How to Transfer a Lease

If you decide to transfer a car lease to your own or someone else’s name, there are steps you need to follow.

1. Examine Lease Offers

The first thing to do before lease assumption is to examine the lease offer. Assess it for fees that will transfer to you.

Once you’ve established what those are, plan a way to meet them.

If you’re unsure you can manage all the payments involved with taking over the car lease, contact the leaser.

It’s possible they can offer a cash incentive to help meet certain conditions.

2. Contact Lessee

Once you’ve read over the lease, the next step in transferring an auto lease is to reach out to the original lessee.

This is the person who currently holds the lease and is seeking a transfer.

It’s possible to negotiate a transfer privately.

However, lease transfers have higher success transferring the lease through an experienced company.

This keeps the lease transfer process transparent. It also helps the prospective lessee avoid unexpected expenses.

3. Use a Company

One of the most straightforward ways to swap a car lease is to go through a company.

Companies like Leasetrader and Swapalease can be valuable when it comes to simplifying the lease transfer process.

But, if you transfer your lease through a company, it’s worth noting that they will run a check to establish your credit rating.

If it is good enough to sustain the monthly payments they will proceed with the lease transfer.

If you aren’t sure you’ll pass that check, avoid transferring your car lease through a company.

Leasetrader

leasetrader screenshot - taking over a car lease post

Leasetrader is an enterprise designed to help transfer lease agreements between customers.

The site has a seller central where sellers list their lease and vehicle details.

There’s a further option to upload photos to give buyers extra clarity.

The site’s buyer central helps prospective lessees to scroll through vehicles and owners looking to transfer leases.

Leasetrader is about giving lessees options.

It aims to simplify the transfer of an auto lease with a minimum of expense and with as much efficiency as possible.

Swapalease

Swapalease is another website that works to match prospective lessees with existing ones to enable successful lease transfers.

It works to match short-term lease seekers with individuals who want to transfer their car lease.

Additionally, it strives to minimize the initial costs of a lease transfer and mitigate the potential expense of transferring a car lease.

Provided a prospective lease vehicle is eligible for transfer, and the would-be-lessee equally eligible to take over the lease, Swapalease then guides seller and buyer through the process of transferring the car lease.

Sellers are required to detail all vehicle requirements, monthly payments, and other lease details to ensure buyers have access to all the relevant information they need to inform their decision.

Frequently Asked Questions

Because transferring a car lease can be a fraught and complicated process to navigate, we’ve compiled some of the most frequently asked questions to help you through the process.

Can I Buy My Lease-Take-Over Vehicle?

Yes. This may vary depending on the lease, but typically, by assuming the conditions of the lease you also assume the end of lease terms.

This may include an option to buy the vehicle you leased outright.

Note that if you opt to buy the car, you assumed in the lease transfer it will still be subject to state or provincial sales tax.

What are the Most Important Considerations When Taking Over a Car Lease?

While you should give several considerations equal weight, the most important are the terms of the lease you are transferring.

Read the fine print carefully for details pertaining to:

  • Mileage cap
  • Excess wear
  • Additional fees

How Do I Choose a Company to Help With a Lease Swap?

Companies that facilitate the lease swapping process for buyers and sellers can be an invaluable resource.

When trying to determine which leasing company is right for you, look for:

  • Reviews
  • Recommendations
  • Customer support/service
  • Lease transfer turn-around time

Also, assess them for:

  • Buyer vetting process
  • Hosting charges
  • Website traffic

Conclusion

Getting out of a car lease can be challenging.

A car lease transfer lessens that difficulty by sustaining the lease while simultaneously freeing the original lessee from the contract they signed.

At the same time, it provides a reliable short-term contract for the person who takes over the lease.

This can be ideal for drivers new to car leasing.

Whatever your reasons for taking over a car lease, remember to familiarize yourself with the lease’s conditions before signing to avoid hidden fees.

It can also be helpful to consider enlisting a company to oversee the lease transfer, though this isn’t necessary.

Finally, ensure your credit score is healthy and you’re in a financial position to undertake the payments pertaining to the lease.

With that done, you can sign the lease contract and enjoy the outcome.

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