How a Car Lease Swap Works

A car lease swap can transfer your lease to another person before it's paid off. Read this guide to learn how to do a car lease swap correctly.
Written by Jacoba Bood
Reviewed by Kathleen Flear
A car lease swap, or a lease transfer, can get you out of a lease early by transferring it to someone else.
Car lease swapping can be a great solution if you cannot make your lease payments or are looking for a short-term vehicle solution. However, if you don’t perform a lease swap by the book, you could be left footing the bill for the lease payments (while someone else drives into the sunset with the leased car!).
That’s why the comparison shopping
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How a lease transfer works

1. Make sure that you can swap your lease
Before you get the ball rolling, call your finance company to ensure that a lease transfer is possible. If it is, ask if there are any fees involved.
2. Find a good candidate
If you can swap, you will have to find someone willing to take over the lease. Ask friends and relatives if they might be interested. If not, you can always take advantage of social media and lease swap pages to find a suitable candidate.
3. Confirm with your finance company
Once you have someone who has agreed to take over your lease, go to your finance company so that they can run a credit check. If the finance company is satisfied with your candidate’s
credit rating
, they will have the lease on the same terms as you.
4. Complete the transfer
The last thing to do is to fill out the paperwork and make the transfer official.
If you are the person who is taking over the lease, be sure to reach out to your state’s department of motor vehicles before driving the car. In most cases, you will need to transfer over the registration and get new license plates first.

Pros and cons of a lease swap

Pros

Affordable
Leasing is usually a
more affordable short-term solution than buying
. It can also be a great way for you to get behind the wheel of a vehicle that would otherwise be out of your price range.
Good deals
Many drivers will want to get out of a lease because they are tight on cash. You might be able to negotiate a deal like cash payments or getting your lease transfer costs covered if they want to get the lease off their hands quickly.
Short-term commitment
The standard lease term is only two to four years, and when you take out a transfer, you will be dealing with an even shorter time frame.
This is ideal if you are just wanting to try out the car or might be considering purchasing the vehicle or a similar model in the future.
Lower Mileage
Since leases often come with mileage restrictions, people who lease their vehicles tend to log fewer miles than those who buy.

Cons

Potential scams
Sometimes leaseholders will try to unload their lease if they know they are likely to rack up fees.
If you miss out on hidden damage or high mileage, you could end up shouldering some hefty fees when you return the vehicle to the lender.
Costs the same as a new lease (just with a shorter term)
If you take on a lease transfer, you will probably end up paying the same amount as a new lease. The only difference is that a lease transfer comes with a short term.
Sales tax
If your state charges sales tax on lease transfers, that could be a major cost you will have to take into account.
Low mileage cars can be hard to find
Since leased vehicles usually have tight mileage limits, you might have a hard time finding a lease transfer that offers low enough mileage to meet your needs without having to worry about racking up extra fees.
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What to consider before taking over a lease

These are some important factors you will want to take into account before signing on to a lease transfer.

Vehicle condition

If you are taking over a lease from somebody else, you need to make sure that the vehicle is in "reasonable condition" or else you could get stuck footing the bill for
wear and tear
or damage that you didn’t cause.
The lease contract will define what a "reasonable condition" is, so make sure you understand what this means.
Always scrutinize the vehicle before signing on to a lease transfer. Look for scratches, nicks, rust, or other damage on the car’s exterior and interior. Check the tread depth on the tires to make sure that they are still in good condition.
The best way to ensure that nothing is overlooked is to hire a professional mechanic to
perform an inspection
. It is also a good idea to research the car’s history online to make sure it hasn’t been involved in any serious accidents.
Keep in mind that you might also have maintenance and service requirements that you will have to abide by to keep your warranty valid.
Before accepting a transfer, make sure you understand what these requirements are and get proof that all prior service markers have already been completed.

Mileage

Leases typically come with mileage caps, meaning you can only drive a set number of miles during your lease term without being charged an additional fee.
Once the mileage cap is reached, fees will typically rack up quickly and can get costly.
This is why it is so important to always confirm the car’s mileage limit before signing a lease transfer. If the current mileage on the car is close to the specified limit, you might want to think twice before you take on that lease, especially if you plan to drive often.
However, if the mileage is close to the limit, you don’t necessarily need to throw in the towel on the deal. Sometimes the current leaseholder will be willing to negotiate a deal or cash incentive to help offset the cost of potential mileage fees.

Other costs

Make sure you consider all the costs that are associated with a lease transfer before deciding to commit.
Of course, you will have to factor in monthly payments and fuel costs, but some costs are not as obvious.
For instance, depending on the state, you might have to pay taxes on your lease transfer. If this is the case, be sure to find out the percentage that you will have to pay and how and when you will pay.
Don’t forget to account for any additional fees, like the mileage fees mentioned above, that you might have to pay to the finance company when you return the vehicle at the end of the lease either.

Leasee’s motivation for swapping

If a deal looks too good to be true, consider that maybe it is.
It is always a good policy to establish why the lessee wants to transfer their lease.
Sometimes people try to offload a lease when they suspect that they will get hit with heavy fees when they return the car to the lender. It is not uncommon for people to try to pass the buck after experiencing issues with the vehicle or having been involved in the accident.
Asking the current lessee why they want to swap may help uncover any hidden motivations or information that they might not want to volunteer. Of course, this doesn’t mean that all motivations are suspect, but it is always good to understand exactly why the lease is being transferred.
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Don’t forget insurance

Don’t forget to consider insurance costs.
Most finance companies will require that you take out full coverage on your leased vehicle, which is another way of saying that you need to have both additional
comprehensive insurance
and
collision insurance
policies in place.
This is in addition to the standard
liability insurance
that almost every state requires.
Having full insurance coverage on a leased vehicle will help protect the lender if you end up in an accident, but it will also help protect you so that you don’t end up shouldering the cost of damage to the vehicle.
The
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As a licensed broker, Jerry's team of insurance agents does all the hard work of finding and buying car insurance. They'll even help you cancel your old policy if you decide to switch providers.
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Yes, you can swap your lease car early. You will need to find a good candidate and confirm the swap with your financing company before the lease swap takes place.
Social media and online lease swap groups make it easy to find an ideal lease swap even if you don’t personally know anybody looking to swap out their lease.
One of the perks of finding your lease swap online is that you can compare different options to land a solution that works for you.
Once you find the lease swap that works for you, you will need to make sure you get that vehicle covered before you sign off and drive away.
Purchasing a vehicle is a big commitment and leases provide a low-commitment option.
For instance, leases are a great option for anybody looking for a short-term vehicle solution. They are also a great choice if you are thinking about investing in a vehicle but want to be able to test out some models first without having to worry about a long-term commitment.
Likewise, if you are looking for a good way to land a vehicle that might otherwise be out of your price range, a lease is ideal.
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