Why are there so many problems with titles for vehicle lease buyouts? Our help desk sees this problem frequently where somebody gets to the end of their lease and decides to pursue a buyout, but then months or years later they end up with a vehicle they can’t drive because they don’t have a legal title. You paid big money for your buyout, why does this happen?
How does leasing a car work?
When you lease a car from the dealership, the dealer will have the vehicle titled in the name of the lease company, not your name. This is because when leasing a car, the lease company is technically the owner of the vehicle, you are essentially renting the car. You may be the registrant, meaning that your name is on the registration and associated with the license plate, but the titled owner is the leasing company. When leasing a car, you are the registered driver, not the registered owner.
Leasing a car from a dealership is different from financing a car from a dealership. When you finance a car, you are also one of the owners of the vehicle in addition to the lender/lienholder. This is because you purchased the car with the assistance of the lender/lienholder, therefore once the loan is satisfied, the lender/lienholder will no longer be an owner. When leasing a vehicle, once the lease is up, the car either goes back to the leasing company or you can buy out the vehicle from them.
Why are there title problems with lease-end buyouts?
When you get to the end of the lease, you’ll have the option to buy out the vehicle from the leasing company, trade it in for another vehicle, or give the car back without a buyout or replacement. After driving the car for a few years, many people opt to buy out the vehicle from the leasing company. If you decide to buy out the vehicle, the leasing company is supposed to sign the title over to you as the new owner, record it with the DMV agency in the state, and have the DMV issue a new title with your name on it. If they don’t do this, they remain the registered owner of the vehicle.
Here’s where the big problem lies… many people assume that the leasing company took the car out of their name, but they didn’t. Later on down the road, this creates a big problem if you are planning to sell or trade in the vehicle because if you’re not the registered owner according to the DMV, you cannot sell or trade in the vehicle because you don’t own it. If 2-3 years later you try to reach out to the DMV or the leasing company, they may have problems locating the correct paperwork, no longer have the specific documentation, or no longer be in business. What ends up happening is the lessee who bought out the lease thought they were the registered owner, but now have a piece of metal they can’t do anything with because they’re not listed as the registered owner.
What should you do to avoid lease buyout title problems?
If you’re at the end of your lease and you’re considering a lease-end buyout, make sure to get the title transferred into your name as soon as possible. Make sure you have an actual certificate of title in your name with your name on the front. If you don’t see the title in the mail within 2 weeks of the buyout, follow up with both the leasing company and the DMV agency in your state. The leasing company has legal obligations to properly complete the transfer so make sure to alert the DMV of any issues you may have with the transfer.
If it’s been a longer amount of time, maybe you bought out your lease a year or two ago, you may need to use a court order process or a bonded title process to get the title transferred to your name properly.
Another option is to prepare the transfer paperwork for the leasing company and mail it to them directly. Each state has its own title transfer form. Find the form specific to your state and complete as much as you can. Send the form to the leasing company with indicators on where to sign. Include an envelope and stamp so they can easily send the documents back to you. When you receive them, submit them to the DMV in your state by mail or in person. Sometimes the convenience factor is what gets the ball rolling.
Most of the time when lease-end buyouts have title problems, it’s not because the leasing company is purposely forgetting or being malicious. Leasing companies don’t normally have a large department of people that are responsible for issuing titles and processing title transfers. Their main business is leasing new vehicles and collecting payments and may not have a large administrative department. While title transfers are still an obligation for the leasing companies to complete, it’s important to remember that the reason there are problems with the process isn’t necessarily due to maliciousness.
So if you’re considering a lease-end buyout option, make sure to take into consideration the title transfer process and how you plan to get this done. Avoid trying to do this over the phone, you are more likely to get results if you have the process in writing such as through email or postal mail. Make the process easier for the leasing company by doing some of the paperwork for them, and follow up with the DMV if you haven’t received your title yet. If it’s your car, you deserve a title with your name on it.
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