Can You Transfer a Car Lease to Someone Else?

Transferring a car lease to another individual is generally possible, depending on the leasing company’s policies and the original lease agreement. This process, known as a lease assumption or lease takeover, involves a new party taking on an existing lease contract’s remaining obligations. It allows current lessees to exit agreements early, potentially avoiding penalties, and offers new lessees a shorter-term commitment. The new lessee assumes responsibility for remaining payments and lease terms. This arrangement requires the leasing company’s full approval.

Eligibility and Requirements for Transfer

Before a car lease transfer, conditions must be met by the original lessee, the prospective new lessee, and the leasing company. The original lessee’s account must be in good standing, with all payments current and no outstanding fees. Leasing companies often require a minimum remaining lease term, sometimes not allowing transfers within the final 6 to 12 months or if fewer than seven payments remain. Vehicle mileage is also a factor, as excessive mileage may complicate the transfer or add costs.

The new lessee must undergo a financial vetting process by the leasing company. This includes a comprehensive credit check. While specific score requirements vary, a credit score of 650 or higher is sought, with scores above 700 securing favorable terms. The new lessee also needs to demonstrate stable income, requiring earnings at least three times the monthly lease payment, along with employment verification and bank statements. Leasing companies assess the new lessee’s debt-to-income (DTI) ratio, looking for it to be below 43%, to ensure they can manage the obligation.

Leasing company policies dictate if a lease is transferable, as not all leases permit this. Some companies have rules on how much time must pass before a transfer or impose restrictions, such as not allowing transfers between commercial and non-commercial accounts. Transfer fees are common, varying from $0 to $650. The original lessee should contact their leasing company early to understand requirements, obtain a transfer packet, and confirm any necessary vehicle inspections.

The Lease Transfer Process

Once eligibility is confirmed and both parties understand the requirements, the practical steps of transferring a lease begin. The initial action involves finding a suitable new lessee, which can be done through online lease transfer marketplaces like Swapalease or LeaseTrader, or through personal networks. These platforms facilitate connections between individuals looking to exit a lease and those seeking to assume one, providing tools to list vehicle details and lease terms.

The potential new lessee then submits an application to the leasing company for approval. This initiates the leasing company’s vetting process, including credit and background checks. The leasing company assesses the applicant’s financial standing to determine if they meet underwriting guidelines. This approval process takes a few weeks, though it can vary based on the leasing company’s efficiency.

Upon approval, the leasing company prepares the necessary documentation and agreements. Both the original and new lessee must sign these forms, which formally transfer the lease contract’s responsibilities. This documentation includes a lease assumption agreement, legally transferring remaining terms, payments, and obligations to the new lessee. The original lessee should ensure paperwork specifies a full transfer of liability, if permitted, to absolve them of future financial responsibility.

After all documents are signed and processed, the vehicle handover occurs. The new lessee assumes possession of the vehicle and becomes legally responsible for the lease. The new lessee must register the vehicle in their name with the motor vehicle department and arrange for insurance coverage, as required by law and the lease agreement. The entire process, from finding a new lessee to finalization, can take between one and three weeks, depending on the responsiveness of all parties involved.

Financial Considerations

Financial implications affect both the original and new lessees. A primary cost for the new lessee is the transfer fee charged by the leasing company, ranging from $75 to $650. This fee covers administrative expenses for processing the transfer and the new lessee’s credit application. The original lessee might also incur listing fees if using an online marketplace, ranging from $60 to $150.

The new lessee assumes responsibility for all remaining monthly payments for the lease term. These payments remain consistent with the original lease terms. Regarding the security deposit, policies vary; some companies transfer the original deposit to the new lessee, while others return it to the original lessee and require a new deposit from the assuming party. If the original deposit is transferred, the new lessee reimburses the original lessee directly.

Mileage and wear and tear are considerations. Standard lease agreements include annual mileage limits, between 10,000 and 15,000 miles, with penalties for exceeding these limits ranging from $0.10 to $0.30 per mile. The new lessee assumes the risk of any existing excess mileage or potential future overages, and responsibility for excessive wear and tear at the lease’s end. A thorough vehicle inspection and accurate assessment of remaining mileage allowance are recommended before finalizing a transfer.

An original lessee may offer an incentive, such as a cash payment or covering the first month’s payment, to make their lease more attractive for a takeover, especially if eager to exit the contract. Conversely, the new lessee might offer a “down payment” to the original lessee to compensate for equity or initial payments. Some leasing companies, approximately 20%, may retain the original lessee on the contract, making them contingently liable for unpaid balances, such as excess mileage charges or lease-end fees, if the new lessee defaults. The original lessee should understand any residual liability post-transfer.