When you sign up for a car lease, it's a fairly long-term commitment. Whether you agree to a 24-month or 60-month lease, you may change your mind at some point during the term. In that case, having someone else take over your lease can be a win for everyone. If you're in the market for a new car and thinking about leasing, taking over another person's lease can be a way to avoid the hefty down payment and get a great deal. A lease takeover simply transfers the lease to someone else, who then is responsible for the payments until the end of the term.
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What Is a Car Lease Takeover?
When you sign a lease on a car, you're usually entering into a contract with a car manufacturer's finance department, rather than the car lot itself. Leases can also be handled by leasing companies and financial institutions. When you lease a new car, the dealership actually sells the vehicle to the lender, which then collects monthly payments from you. At the end of your term, you have the option to buy the car, turn it back in and pay any fees or trade it in for another vehicle.
But there are some instances where you simply don't want to wait until the end of your lease. Perhaps the decision isn't a "want" as much as a "need" – you can no longer afford the payments, or your family has outgrown the car. Ending your lease early means you'll likely be asked to pay all the monthly payments remaining, plus fees. If you can find someone to take your lease over, you won't have to pay those fees. You can either round up someone you know or advertise your vehicle on a lease takeover site. The interested party will need to pass a credit check and be approved by the lender, but once you've passed all of these obstacles, you'll be free and clear.
Various State Variations and Laws
Although the process of transferring a lease will be consistent from one state to the next, the cost of such a transfer will vary due to state titling and tax assessments. This gets especially complicated if you're taking over a lease in another state. When you bring it into your state to register it, you'll find out just how much that will cost.
Each state has its own sales tax rate on vehicles. In most states, you'll be given credit for the sales tax paid in the previous state to avoid duplicate tax collection. In Texas, you'll pay 6.25 percent of the price the original lessee paid for the vehicle. But you will be given credit for the sales tax either you or the lessee paid in the previous state. Take all documentation verifying sales tax previously paid with you when you register your vehicle.
The good thing about taking over someone else's lease is that you'll assume the terms that the previous lessee paid. As long as your credit score is strong enough to qualify, you should be able to enjoy the same monthly payments. For the person exiting the agreement, the biggest pitfall can come if they aren't careful enough to ensure removal from all liability. If you're handing your lease over to someone else, make sure the contractual agreement stipulates that you are in no way responsible for what happens with the vehicle or payments once the deal is signed.
If you're the person taking over the lease, it's important to pay close attention to the mileage of the vehicle you're assuming. Many leases have mileage restrictions, with overages charged at a per-mile rate. If the car is close to the limit, you may be hit with a surprise bill at the end of your lease.