Moving out of state? If you drive a leased car, you’ll want to check your lease before you hit the road. Depending on your lease agreement, you might not have the legal authority to relocate the car permanently out of state. And, if you can do, you’ll need to take some extra steps to register it in the new state and return it when the lease is up. Here’s what you need to know before you cross the state line in your leased car.
Most lease agreements will allow you to permanently move the car you’re leasing out of state, but not all do. Read your lease agreement carefully to find out if you can move with the leased car and under what terms and conditions. For example, you may be required to let the lessor (the owner) know you are relocating with the car out of state.
Unless you are an attorney or have experience in the leasing industry, you may have a difficult time understanding the lease agreement. Call the lessor and ask them definitively whether you can move the car out of state and what your obligations are if you do.
Even if you think you understand the lease agreement, call the lessor to confirm the terms and conditions. It’s much better to know up front what you need to do to move to a leased car to a new state than to try to make things right at a later date.
Don’t lose hope if the lease agreement specifically says you cannot permanently move the car out of state. Sometimes, lessors will amend the lease agreement. Call the lessor, and let them know that you are moving to another state. You may need to put your request in writing and sign the amended lease if they are able to make the amendments. Be sure you understand any terms and conditions that are added to the lease to allow you to take car out of state.
On the other hand, if they won’t allow you to move the leased car out of state, you can discuss your options while you have them on the phone. (Learn more about how to break your car lease below.)
Most states require you to re-title your vehicle after a move, even if it is leased. Since you don’t own car, you don’t have the right to retitle it, which makes complying a little tricky. Before you move, contact the local titling authority in your new hometown and find out what you’ll need to retitle the vehicle. (At the very least, you will probably need a temporary power of attorney.) Then, contact the lessor.
Chances are, if you lease a vehicle from a major lessor like Toyota Lease Trust and plan to move to a major urban area like Nashville, the lessor may already know what paperwork they need to complete to retitle your leased car. However, to be on the safe side, it’s better to know for yourself what you’ll need and make sure you have it before you leave.
Registration and title are two different things. The title shows who owns the vehicle while the registration shows that you’ve paid the state’s taxes and fees to drive the vehicle there. When you retitle the car in the new state, you receive a document from that state showing that the lessor owns it. When you register the vehicle, you will receive a license plate and documentation showing it is roadworthy.
In some states, you’ll have as little as 10 days to register your car there, so don’t put it off. You’ll usually need an original or license copy of the car title, a limited power of attorney, current registration, driver’s license and proof you’ve paid the lease taxes in your new state.
Don’t forget you also need a new driver’s license from your new state and car insurance from a company doing business there.
Not surprisingly, it costs money to retitle the car, and the lessor won’t cover these costs. You’ll be on the hook for any fees associated retitling the car in the new state (and possibly for titling it back to the state it was originally from when you return the car to the lessor).
Additionally, some states collect taxes on a leased car at the start of the lease while others collect taxes during the lease period. If you live in a state that collects taxes at the start of the lease but move to one that collects during the lease period, you usually will pay both at the start (in the state where you leased it) and during the lease period (in your new state). You may or may not get a “credit” for having paid taxes in the previous state upfront. For example, Texas gives you a credit for any tax you paid to another state up until your move.
Most leases specify you must return the vehicle to the location where you leased it. However, some large leasing companies may have locations in your new state. Call and ask. You may be able to have your leasing agreement amended to return it to a closer location.
On the other hand, the lessor may not be flexible. If that’s the case, you’ll either need to drive the car back to the location where you leased it or arrange for a car transport company to return it for you. And, either way, it will cost you money. If you drive, you’ll need to buy a plane ticket to fly home or rent a car to drive back. If you hire a transport company, you could pay as much as $1,000 for the convenience of having someone else return the car.
It doesn’t always make sense to move your leased vehicle to a new state, and as mentioned above, not all leases permit it. So, what do you do if you are moving out of state (or the country) and can’t bring the car with you?
One option is to return it to the lessor. Depending on your lease, this can be very expensive. You may have to make all the remaining payments on your lease at once or pay an early termination fee. You may also have to pay costs related to preparing the vehicle for sale as well as general car lease penalties for wear and tear and mileage penalties.
Or, you may be able to find someone to take over your lease, if your lease agreement permits it. Most leasing companies have restrictions on who can assume your lease and when, and many will charge you a fee (although a much smaller one than what you’d pay if you return the leased vehicle outright). Find a company that specializes in lease swaps, like Swapalease, to help with the process.
There’s a lot involved with a move—even if you don’t have a leased car to worry about. Give yourself a break and hire professionals to pack and move your belongings. We have an extensive network of reputable and reliable movers who can do the job for you. And, because they’re licensed and insured, you can focus on other things, like dealing with your leased car and let them handle the rest.
Teresa Bitler has been covering moving, real estate, home improvement and home decor for more than 15 years. She enjoys writing articles about moving to specific cities, like Denver or Nashville, and what to expect when you get there. She also likes to write about home improvement and getting your home ready for a move. As a real estate investor, she wrote extensively for Personal Real Estate Investor. She has also written for Su Casa, US News & World Report and local publications about home improvement topics. Bitler currently lives in Phoenix, and although she’s moved too many times to count, she plans on staying put—at least for a while.View all posts by Teresa Bitler
