Moving to another state, whether for a new job or new beginning, can be an exciting time in your life. Just the thought of having a fresh start conjures many emotions of anticipation. This can also create overwhelming feelings as you move through the checklist of things to do: pack belongings, schedule a mover, withdraw children from school and contact your car leasing company.
That last item raises the question of whether you can move to another state and keep the leased vehicle. In short, the answer depends on what is outlined in your leasing agreement about the right to move the car to another state. With some leasing companies, you would be prohibited from permanently moving the leased car to another state or country. Others might grant you the right.
Contact your leasing company as soon as you know you will be moving so you have plenty of time to prepare. You may need to add ‘buying a car’ to your to-do list.
Notify Lease Company
It is important to notify your leasing company of your plans to move to another state. Even if your agreement permits it, the company will need an update billing address that the car is garaged at a new location. Equally important is there may be a difference in the sales tax rate between your current address and new one. Any change in the rate also changes your monthly payment.
Specifics on how much your payment may change depend on the state. In some states, your payment may increase; in others, you may see a decrease in the payment.
Consider Possible Changes to Taxes
If your move takes you from a state where the entire sum of lease payments under the agreement are taxed, you will need to verify the laws of the new state. Contact that state’s department of motor vehicles and ask if you can get a refund or credit for the portion of taxes you already paid.
Although this is possible, it is also possible that the new state will use a different system to tax the vehicle. Some states collect taxes when the lease begins and others collect taxes throughout the term on the lease. In these situations, you could be required to pay additional sales or use taxes to the new state. Keep in mind that not all states will issue a credit or refund for the taxes you already paid in the state where the lease originated.
Other considerations include car insurance, and registration and tag fees. Insurance rates are subject to change from one state to the other. This might be the case even if you stay with the same insurer. Switching insurers is necessary of your current carrier is not licensed to do business in the state to which you are moving.
Likewise, the process of obtaining registration and tag fees may differ. Instructions for transferring to another state are typically detained on the state’s motor vehicle website.
Transferring Your Car Lease
If it turns out that your lease agreement does not permit moving the car to another state, you might have other options such as transferring the lease to a new owner. Again, this rests solely upon what was negotiated at the start of the lease, so reading the fine print before finalizing decisions is in your best interest.
When lease transfer is permissible, it can release you from legal obligations. Using this option, you must find another person who is willing to become the lessee for the vehicle. This might require providing an incentive for the lease transfer. For instance, you might want to leave the damage deposit.
Finding someone to take over your lease payment might not be the best solution before your move to another state for various reasons such as:
• The potential lessee does not have good or sufficient credit to take over the lease payments
• Positive equity is in your leased car
• There is excessive damage, wear or mileage on the leased car
• There is a post-transfer liability for this type of transaction
However, if everything works in your favor, the process to complete the lease transfer is very similar to buying out your lease.
Breaking Your Lease Agreement
The least favorable option if you are unable to move to another state with your leased car is to simply break the lease agreement. Before proceeding with this, however, it is important to fully understand the terms of your lease. Most likely, you will owe penalties, lease payout fees and other ongoing liabilities as outlined in the agreement for the remaining time of your lease.
Contact your lease company, whether you have leased the vehicle through an agency or dealership. The leaseholder will have the specific terms of your lease and any information you need to make a sound decision.
Read your lease agreement and make sure you fully understand the consequences to your decision, which depends entirely on the leasing company’s policies and regulations of both states.