Lease Transfer

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Sometimes things crop up in life which scupper long-term plans, no matter how well thought out. Because vehicle lease terms are typically two to four years, there are several circumstances that could arise (such as becoming pregnant, relocating, being made redundant etc) that could result in you wanting to break that lease but are worried about facing the costly penalties from leasing companies. However, consumers can sometimes escape their lease and effectively pass it on to someone else, a trend which is particularly popular in the US and on the rise here.

What is a lease transfer?

A lease transfer is when you wish to exit the terms of your lease and rather than terminate your contract and pay the fees, you transfer it over to someone else who carries on paying the monthly payments. You’re then freed from the contract.

The benefit for the person receiving the car with the transferred lease is that they can get an almost new vehicle at a lower cost with no downpayment as all the upfront costs have been covered.

Things to consider

You’ll need to check with your lease provider whether a transfer is permitted and whether you’d still hold any responsibility for the payments after the transfer has been agreed. If that’s the case, then terminating the lease is a safer option.

You’ll also need to find out what the early termination payoff and prepayment penalty amounts are. The amount owed will be the difference between the early termination payoff stated on the lease agreement and the amount credited for the vehicle so far. This amount is usually substantial and equivalent to making all the lease payments at once. There may also be a prepayment penalty fee so make sure you do all the maths first to see what is most financially viable.

It’s also worth checking with the lease provider if there are any transfer costs that could be incurred.

How do I transfer my lease?

There are firms out there who can organise a lease swap for you so compare as many as you can and check their fees (such as advertising the lease for instance) and services.

They may ask you various questions such as whether you can negotiate a cash incentive in order to bring down the cost of the lease. How much you decide on will depend on how quickly you’re keen to break the lease and what you think is a sensible offer based on the condition of your car, mileage, service records etc.
The buyer may also ask you to split any lease transfer fees so be prepared to negotiate.

The buyer will have to go through various credit checks before the transfer is confirmed and then documents will be sent out to both buyer and seller. Once they’re all signed and any transfer fees paid, the deal is done.