Tips on Buying Cars: Buying friends car when lease is up, state tax filing, department of motor vehicle

Question
Hello,
My friend's lease on her 2005 Honda Accord is up in the next couple of months. She is willing to sell it for the buy out price to me. Should we let the dealer handle this when she goes for her new lease or should she sell it to me without going thru the dealer? Thanks in advance

Answer
Hi Colleen,

Good for you! If this is a good friend of yours, I would work this out at the Department of Motor Vehicle.  

However, I would have you and your friend ask the title clerk where she is leasing her new car for some advice. You can of course run this directly through the dealership...they will run it through the state inspection process. They will do all the state tax filing and they're able to do your tag work. There will be a cost of this service for sure.

Either way you do this, your friend will have to pay off the lease before you can receive a free and clear title; which is needed for you to get new tags. This may take a couple of weeks. So, when you're a few weeks out, pay your friend, so she can pay off the lease. Then they will send her the title and you both can sign off.

I know this sounds confusing, and it is. But, please make sure when you give your friend the money, that your friend does pay off the lease and you do get the title. This is a true test of friendship...I would recommend having a purchase agreement notarized between you and your friend. It protects you and her.

Good luck, and I hope this helps!

Doug