When your car lease expires, purchasing the vehicle may be a good option if you grow attached to it and want to continue driving it. However, similar to buying a vehicle, a lease buyout comes with certain responsibilities, one of which is transferring the car title.
The car title transfer process may vary from one state to another, so it's essential to check with your local Department of Motor Vehicles (DMV) to find out what exactly you need to do to become the official owner of your leased car. In this article, we tell you everything you need to know about completing a lease buyout title transfer, including how the process works and the documents you typically require.
Completing A Lease Buyout Soon? Compare Auto Loans Below
Why Is Transferring the Title in a Lease Buyout Important?
A lease buyout title transfer is vital to your ownership of your leased vehicle. While your lease contract is still in effect, the vehicle belongs to your leasing company or the bank or financial institution to which it assigns the lease. If you opt for a buyout at or before the end of the lease term, transferring the title into your name is necessary. This document proves you legally own the vehicle.
If you want to sell your vehicle in the future, you'll need to have the car title in your possession to complete the sale. Without the title, you won't be able to make the buyer the new owner of your car.
How Does a Lease Buyout Title Transfer Work?
Whether you opt for a lease-end or early buyout, your leasing company should gather all the necessary documents to transfer ownership of the vehicle to you. These documents include the car title, lease buyer paperwork, bill of sale, and odometer statement. The lessor can do the title transfer paperwork on your behalf, but it may charge you a processing fee.
The lease buyout title transfer process is similar to a private- or third-party vehicle purchase. At least, the titling office will treat it that way. Transferring the ownership of your leased vehicle requires you to complete a car title transfer application form and submit it to your local DMV, along with all the necessary documents. In many cases, the DMV will use artificial intelligence to review and approve your application without issues, as long as you meet all the requirements.
You must pay any applicable state and local sales taxes on your leased vehicle before transferring the car title. Even if you paid the sales tax on your monthly lease payments, you'll still have to pay tax on the vehicle's residual value. A few states charge sales tax on the car's full purchase price at the beginning of your lease. In this case, you won't have any sales tax left to pay when your lease is over.
In addition, you'll usually need to submit a bill of sale to transfer a vehicle's title. This document serves as proof of the car purchase transaction between you and your leasing company. If your state doesn't provide a template for this, draw one up yourself. While it can be quite basic, a bill of sale should include the make and model of the vehicle, sale price, date of sale, payment method, and the names, contact details, and signatures of the buyer and seller.
You may have to arrange a state safety inspection if you're doing an out-of-state title transfer. You might also need a new registration and license plate number if the car's current license plate is in your lessor's name.
How to Apply for a Car Title Transfer
It's important to find out if your car dealer has the vehicle's title on hand to ensure a smooth lease buyout title transfer. Sometimes a dealership or leasing company keeps electronic car titles instead of physical ones, so it may have to obtain a duplicate copy before signing it over to you, which can cause a delay. It can also be more difficult if a financial institution possesses the title or if your lessor is in a different state.
Once you have the car title, fill out any necessary information in the transfer ownership section using only black or blue ink. Remember that car titles vary from state to state, so you may find this section on the front or back of the title. This typically requires you to provide the following information:
Names and contact details of the seller and buyer.
Vehicle identification number (VIN).
Date of sale.
Signatures of the seller and buyer.
Ensure you and your leasing company don't sign in the wrong place, as doing so can void the title. If you make a mistake, avoid crossing it out or using correction fluid to cover it. Just explain the situation to the DMV, and it'll either officially correct the mistake or issue you a new title.
The procedure and requirements for a lease buyout title transfer differ from state to state. For instance, in New York, lessees who want to purchase their leased vehicles have to complete the MV-82 title application form. Also, in some states, such as Maryland, car buyers must provide a state safety inspection certificate as part of the car title transfer process.
You should find out beforehand whether your state requires the vehicle seller to sign the vehicle title in the presence of a notary public. If so, ask your lessor to accompany you to the DMV.
Regardless of your state, you'll have to pay a fee to transfer your leased car's title to yourself. This fee is usually under $100, so it won't make a big difference in the overall cost of your lease buyout.
What Are the Required Documents for a Lease Buyout Title Transfer?
Again, the documents necessary to transfer a car title vary by state. Check with your state's DMV office to find out the exact requirements. Below is a list of documents you typically need for a lease buyout title transfer:
Valid photo ID.
Completed car title and registration application form.
Signed and notarized car title, including odometer reading.
Bill of sale.
Proof of sales tax payment.
Safety inspection certificate, if applicable.
Proof of car insurance.
Tips for a Seamless Lease Buyout Title Transfer
Many things can go wrong during a lease buyout title transfer, such as incomplete documentation and missed deadlines. To avoid unnecessary hassle, penalties, and other unpleasant surprises, follow the tips below to ensure everything goes smoothly:
Verify the VIN: Ensure the VIN on your leased vehicle's title matches the one on the driver's side dashboard or door jamb.
Verify the name: The name on the car title should be the same as that of the person selling the car. If there are two names on the title, it may be necessary for both individuals to sign for the title transfer, depending on whether the names have an "or," "and," or "and/or" between them.
Check the insurance requirements: In most states, you must show proof of insurance to transfer a car title. Make sure your leased vehicle has at least the minimum insurance requirement before going to the DMV. Check with your insurer for more details.
Know the title transfer deadline: After you buy out your lease, you have to transfer the vehicle title to yourself within a certain period. The deadline typically ranges from 10 to 30 days, depending on your state.
Knowing all the procedures and requirements for a lease buyout can help you take ownership of the vehicle you love with minimal hassle and delay. A lease buyout title transfer may seem challenging, but it's easy and quick if you know how to go about it. Check with your leasing company and local DMV to find out exactly what you need to do to transfer your leased car's title into your name.
You Might Also Like