Taking Over a Car Lease: The Pros and Cons

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Filed under Automotive, Editorial

Leasing a car can be an attractive option for individuals seeking short-term access without a long-term loan commitment. When personal circumstances change, taking over a car lease provides the benefits of car leasing without the initial upfront costs and has additional advantages. But while there are many pros to taking over an existing car lease, there are some cons to be aware of.

What is a car lease?

A car lease is a contract between a leasing company or dealership (the lessor) and an individual or business (the lessee). The lessee pays a monthly fee to use the vehicle for a set period, and a standard car lease usually lasts 2 to 4 years. Unlike buying a car outright, where you own it, leasing means you have the convenience of a car without the financial burden of a purchase.

What is a short-term car lease?

A short-term lease is a car lease agreement shorter than a standard or long-term lease. While they can vary in length, short-term car leases typically last a few months to one year and offer more flexibility than longer deals without long-term obligations.

What is ‘taking over a car lease’?

If someone’s personal or financial circumstances change, such as relocation or redundancy, they may need to break from their car lease contract early when early termination is not appropriate. Taking over a car lease allows a new lessee to secure a vehicle without paying initial costs.

Taking over a car lease, also known as a lease transfer, lease assumption, or lease swap, is when a new lessee assumes the lease agreement and responsibilities of a vehicle. The original lessee is released from the contract, and the new lessee becomes liable for all payments and conditions.

What are the key pros and cons of taking over a car lease?

Pros of taking over a lease:

  • An almost-new vehicle without the initial costs: The new lessee avoids all the initial fees, as the original lessee will have paid all the upfront costs. Depending on how urgent it is for the original lessee to transfer their lease, they may be willing to offer cash incentives to avoid early termination fees and help transfer the lease quickly.
  • Warranty coverage: When taking over a car lease, the new lessee has all the benefits of driving a new car and takes over the manufacturer’s warranty coverage balance.

Cons of taking over a lease:

  • Monthly payments: The new lessee is responsible for the original leaseholder’s monthly payments, which may include a higher interest rate than the lessee could get with a new lease.


  • Vehicle condition: The new lessee will inherit the vehicle’s condition left by the previous leaseholder and is responsible for excessive wear or damage caused by the original lessee.


  • Limited mileage: Lease takeovers often have mileage limits, and exceeding these limits can result in additional charges.


  • No equity: A lease takeover still does not build any equity in the vehicle, and at the end of the lease, the car must be returned or purchased at a predetermined residual value.


  • Additional costs: Lease takeovers can incur extra fees, such as lease transfer fees, credit application and other administration fees.


What steps should I take when transferring or taking over a car lease?

  1. Ensure the leasing company allows lease transfers: The original lessee must check their contract and contact the leasing company to confirm if they permit lease transfers. Some companies restrict transfers close to the lease’s end or may prohibit the transaction altogether.
  2. Undergo a credit check: Potential new lessees must undergo a credit check to determine their eligibility to take over the lease. The leasing company will review the credit history to assess the new lessee’s financial stability.
  3. Complete necessary paperwork: Once the credit check is approved, both parties involved in the lease transfer must complete the required paperwork to finalise the handover.
  4. Register the car: The new lessee must register the car after the lease transfer, plus pay any associated fees.
  5. Inspect the vehicle’s condition: Before finalising the lease transfer, inspect the vehicle’s condition. Look for damage, excessive wear and tear, or mechanical issues. Hiring a qualified mechanic for a comprehensive inspection to identify potential problems is advisable.
  6. Understand additional costs associated with lease transfers: Be aware of potential extra costs associated with lease transfers. These may include lease transfer fees charged by the leasing company, credit application fees, and disposition fees for returning the car at the end of the lease.

Is taking over a car lease the right option for you?

Deciding whether taking over a car lease is right requires thoroughly evaluating your current circumstances and future needs. Suppose you need a vehicle for a shorter duration or desire the perks of driving a newer model without the commitment of a long-term lease while avoiding all the initial fees associated with getting a short-term car lease. In that case, a lease takeover may present an attractive option.

Consider factors such as the monthly financial commitment, the vehicle condition you’re taking over, and any mileage limitations that may impact your usage. While lease takeovers can offer economic benefits like reduced upfront costs and potential incentives from the original lessee, they also come with responsibilities, such as assuming payments and adhering to the terms of the existing lease agreement.


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