There are many benefits to having a car as a college student. First and foremost is, of course, freedom. Having the freedom to drive to and from class without relying on the school’s transportation system – or your own two legs. Having the freedom to drive to the grocery store or a restaurant or even home to see Mom and Dad (for laundry day, of course) is a luxury that many college students live without.
Owning a vehicle may seem out of the realm of possibility for those who are racking up student loan debt at lightning speed, but there are actually many opportunities available for college students to have a car that they can reasonably afford. One such option is assuming a car lease.
Leasing a car comes with more flexibility than purchasing one, which can be extremely beneficial to a college student. For instance, when you lease a car, you only pay for the value of the car in the time frame you are willing to lease it, not the total value. This means you are making a much smaller commitment – usually around 40 months – and your payments will typically be smaller than if you were purchasing the vehicle outright. However, leasing a vehicle still requires a down payment, which is typically about $1,000 or 10 percent of the price of the car. If this is out of your price range, or if you would rather not commit to a 40-month or longer lease, then taking over a lease from someone else may be an option worth considering.
Benefits of Assuming a Lease
A lease assumption allows one person to assume an in-process lease from another person. Basically, when a car lessee no longer wants the vehicle he or she has leased for whatever reason, they may choose to sell their lease. There are many ways to do this, but often the most efficient way is to transfer their lease to a third party, or, have someone “assume” their lease.
Assuming a lease can be a great option for a college student because it is often more affordable, requires a smaller commitment, and may even come with a cash incentive. For example, taking over a lease often requires no money down – or at least less money than would be required with a new lease agreement, because the lessee made the down payment when they agreed to the lease. Also, because the lessee has already had the vehicle for a period of time, you will only have to agree to make the payments for the amount of time left on the lease. Finally, people who are trying to sell a lease may offer some sort of financial incentive to entice a person to take over their lease. Since terminating a lease with a dealership early often means very hefty fines, it may be more cost-effective for the lessee to offer a cash incentive to someone willing to take over their lease than to pay the termination fees to the dealership.
How to Assume a Lease
The first step in the process of taking over a lease is to do your research. Check your credit score, figure your budget, determine how much money you can afford to put towards a vehicle payment each month (don’t forget to factor in insurance, gas, and maintenance), and then decide what type of car you would like to have and can reasonably afford.
Once you know what you can handle, then check out a lease transfer website, such as Swapalease, where you can view thousands of vehicles available for a lease assumption. As you peruse the listings, be sure to keep these things in mind:
- Monthly Payment: Make sure you can afford the monthly payments, but remember, you will likely not be required to put money down like you would for a new lease agreement.
- Location: Is the vehicle you’re considering within close proximity to you? Finding one that is nearby will be the most cost-effective option, but you can also have a vehicle shipped to you for around $500-$1000. It’s important to factor in relocation costs before deciding on a lease assumption option.
- Miles Allowed: How many miles will you be allowed to put on the vehicle per month? This is different for every vehicle so you need to pay close attention to the terms of the lease. Keep an eye out for deals with mileage allotments – especially if you plan on driving a lot of miles.
- Cash Incentive: Remember that lessees are often willing to provide a cash incentive to people willing to take over their leases. Incentives can range from covering a single month’s payment to thousands of dollars in cash. However, sometimes in a listing, a lessee will post a lower monthly payment because they have factored in the cash incentive. This means that the monthly payment is actually higher than what is listed. Be sure you check with the lessee and ask this question directly before agreeing to assume the lease.
Once you’ve narrowed down your options, then it’s time to reach out to the seller of the lease and begin the negotiation process. There are several questions you should consider asking the seller during negotiations, such as:
- What is the condition of the car? Is there any cosmetic damage? Has it been involved in any accidents?
- How many miles are on the vehicle?
- How much wear is left on the tires?
- Are you willing to cover the cost of shipping (if applicable)?
- Does the payment include taxes?
Next up, it’s time to negotiate your deal. The word “negotiation” may be intimidating to some – especially to college students who don’t have much experience with this type of thing – but it is essential to getting the best deal possible and it is also a great learning opportunity. Don’t be afraid to ask for things you want in regard to cash incentives, over-mileage fees, and shipping costs.
Once you have come to an agreement regarding your deal, the next step is to begin the lease transfer process. This will involve a credit check, transfer paperwork and the shipping or pickup of the vehicle. The most important thing to remember here is to read through all paperwork extremely carefully. Make sure that absolutely everything you negotiated is included in the documents before you sign. Remember, once you sign those papers, you agree to everything written in them and are liable for the remainder of the lease term.
Finally, you need to know what to do with the vehicle after the lease term is up. Some leasing companies require the lessee to deliver the vehicle to a local dealership, whereas others might demand that the vehicle be dropped off at a designated auction lot. Your leasing company can provide you with the location of your nearest drop-off point. Remember, you may be responsible for having any damage repaired before returning the vehicle or paying for repairs once it is returned.