When Does Title of a Vehicle Pass to the Consumer if it is Financed on a Lease Purchase Agreement?

If you’re considering financing a vehicle through a lease purchase agreement, it’s important to understand when the title will pass to you, the consumer. The answer to this question can vary depending on the terms of the agreement and the state laws that govern it. Here’s what you need to know.

Title Transfer vs. Ownership

Before we dive into the specifics of when title passes, it’s important to understand the difference between title transfer and ownership. Title transfer is the transfer of legal ownership of a vehicle from one person or entity to another. Ownership, on the other hand, refers to the physical possession and control of the vehicle.

In most cases, the title of a vehicle is held by the lender until the lease purchase agreement is paid in full. This means that while you may be making payments on the vehicle and have possession of it, you do not technically own it until the agreement is completed.

When Title Passes

The timing of when title passes can depend on the terms of the lease purchase agreement and state laws. Generally, title will pass to the consumer once the final payment on the agreement is made. However, some agreements may have provisions that allow for title to pass earlier, such as after a certain number of payments have been made.

It’s important to carefully review the terms of your lease purchase agreement to understand when title will pass and what your obligations are under the agreement. In some cases, the agreement may require you to maintain certain levels of insurance or to adhere to mileage restrictions.

State Laws

The laws governing lease purchase agreements and the transfer of title vary by state. Some states may require the lender to release the title once the final payment is made, while others may require the lender to sign the title over to the consumer. It’s important to research the laws in your state to understand your rights and obligations under the agreement.

Wrapping Up

When you finance a vehicle through a lease purchase agreement, it’s important to understand when the title will pass to you, the consumer. Generally, title will pass once the final payment on the agreement is made, but this can vary depending on the terms of the agreement and state laws. Be sure to review the terms of your agreement and research the laws in your state to fully understand your rights and obligations.