Taking over a lease may like seem a great way to test drive the car of your dreams or get a specific type of vehicle you need for a short term. It brings plenty of advantages beyond the thrill of getting a new vehicle and maybe a lot cheaper than financing a car or starting a new lease. But before locking down a price that meets your budget, focus on the terms and check what motivates the seller to give up their lease. Visit eAutoLease.com to find out what a lease takeover is about and what you need to know before taking on someone’s lease to ensure you find the most suitable deal.
What Is a Lease Takeover?
Also known as a lease assignment or lease assumption, a lease takeover involves the transfer of a lease from the original buyer to another person. The new person takes over the current contract and vehicle for the remaining term. This usually happens when the lease seller wants to get out of the contract early.
People currently leasing a vehicle may go for a transfer due to changing family positions or other financial obligations. A transfer is also cheaper than returning a vehicle, while still in the agreement.
Read more: Car Leasing Guide: How to Lease a Vehicle
How Does a Lease Takeover Work?
In a lease takeover, you take over someone else’s lease before it ends, leaving you responsible for the remainder of the period.
However, these short-term leases come with risks too. Before agreeing to a lease takeover and locking down a price that meets your budget, read the terms and consider possible drawbacks. You may find extra fees and conditions that could turn your real deal into a big stress.
Listed here are 5 important points regarding lease takeover you should go through carefully before taking on someone else’s lease to ensure you know what you are getting into.
You Inherit the Monthly Payment
When you are taking over a lease, you cannot renegotiate its terms as they have already been decided between the original lessee and the leasing company. You inherit the same monthly payment and lease terms and will have to follow them till the lease end.
The problem here is that some people do not negotiate as well as others or do not negotiate at all. In addition, at times the original lessee’s credit may not have been good, which can result in higher monthly payments. At times original lessees do not make a down payment, also called a capitalized cost reduction on a lease to reduce their monthly payments.
You may end up inheriting all this when you take over a lease which could lead to a higher monthly payment than if you had leased a car yourself. It is important to shop around and compare leases to find the best deal for your financial situation.
Very Limited Mileage
Just like monthly payments, you have to stick to the mileage limits on the original car lease agreement when you take over a lease. If you go over the predetermined limits, you could face excess mileage charges from 10 cents to 25 cents per mile or more.
It is best to check with the current lessee about the car’s current mileage along with the remaining miles on the lease or the lease’s mileage limit.
Wear and Tear Can Be Expensive
Once you have taken over the lease, you are responsible for the condition of the car till you return it. If you are lucky, you may get a car that has been immaculately maintained by the original owner but chances are you will get a car that has been through a little wear and tear. Too many dents, broken parts, burns or stains, worn tires, or other damages can add up to an expensive repair job, and you may be hit with this charge at the end of the lease.
You may have to pay a wear and tear fee if the original lessee did not get the car serviced based on the manufacturer’s recommended maintenance schedule. You may end up paying for failing to properly maintain the car or for the cost of completing overdue services.
You May Get Stuck With Taxes
Leasing a car is different in every state, and there are laws regarding lease tax. Depending on the state where you are leasing, you may have to pay tax when you take over a lease. In some states, the sales tax must be paid upfront as the lease begins, while some states allow the tax to be rolled into the monthly lease payment. If you are taking over a lease from someone in a nearby state, you may be required to pay taxes in your state.
The best thing to do in this regard is to research the laws in your area to find out if you have to pay sales tax and how much it adds to the cost of the lease transfer. It can keep you from getting stuck with a hefty tax bill.
You May End up Paying More
In addition to the potential fees for excess mileage or wear and tear, you may end up paying the following when you take over the lease or reach the end of the lease:
- Lease transfer fee – Some leasing companies charge for transferring a car lease.
- Credit application fee – The company that has drawn up the lease you are taking over may charge you for checking your credit.
- Disposition fee – When you return the car at the end of the lease, you may have to pay some money to cover the costs associated with preparing and selling the car, such as vehicle cleaning, inspection fee, auction fee, and depreciation.
To avoid paying more, you should confirm any fees and who will be paying them, you or the original lessee, before agreeing to take over a lease.
Read more: Wannabe Car Owners Can Lease a Tesla, but Is It Worth It?
What You Can Do?
If you are considering taking over the lease of a specific car, ask the original lessee for service records to confirm it has undergone required maintenance. If essential, you can also order a vehicle history report to see if the car was in a major car accident or has sustained any damage.
Before moving forward with a lease takeover, shop around to compare lease swap opportunities involving the same model and year to find the best deal.
If you really want the car but are not sure if you will have the ability to stay within the mileage limit by the lease end, check with the original less about mileage coverage charges to plan accordingly. You will have to pay a fee for every extra mile you drive so find out about it before taking over a lease.
A lease takeover can be a great arrangement for both the person transferring the lease and the person taking it over. If you are considering taking over a lease, just make sure to do your homework and understand how things work for a good experience. Find out more information about lease takeover and what you can do to avoid potential risks at eAutoLease.com. With the right advice, you can look forward to getting your hands on the vehicle you want without making a long-term financial commitment.
