Leasing a car out-of-state prohibited?

jimdandy2 · February 2016

I've been shopping around recently for a lease on a new 2016 Volvo XC90. I've decided to cast a wide net in my search for the best deal. That includes out-of-state deals.

I bought a car (Hyundai Elantra) out-of-state about 10 years ago. No problem. I saved a TON of money overall and got a little road trip out of it as well. Fun.

Fast-forward to today. I am trying to LEASE vs buy a car. The best lease deals, by far, that I have found are out-of-state. I have no problem with the logistics of an out-of-state car lease (getting there, driving back or coordinating delivery, registration requirements, etc).

However, the problem I am running into is that two out-of-state Volvo dealers have now told me that they'd love to lease me a car, but the are PROHIBITED from doing so since I am not a resident of their state (California is where the Volvo dealers are located who are saying this). They said I must have a California address in order to lease me a car. They said the exception to this was Nevada. They could lease to me if I was a Nevada resident, but not Utah or Washington or Oregon or anywhere else: Nevada. Sounds kind of crazy.

It also raises some logical questions like 1) What if I did live in California on the day I signed the lease and then moved a week later? Would I have to forfeit my lease? 2) Am I restricted to only buying cars from my home state? If so, that's a pretty big caveat and I haven't heard any new car leasing guides mention it. 3) If I am, in fact, restricted to only leasing cars in my home state, that gives car dealers in my state HUGE leverage since they know I can't really go anywhere else. I have to buy from them. If that's true, it must really suck to live in a small-market state like Wyoming or Rhode Island.

FWIW, other Volvo dealers in California have not brought this up and sound like they are perfectly willing to lease me a car even though I live out-of-state. I have told dealers here in my home state that I am shopping the deal around to other states. None of them have tried to strong-arm me by saying something like, "Good luck leasing a car out-of-state. It's against the law! You can only lease from us here in your home state."

Can anyone shed some light on this subject? Can I lease a new car out-of-state? Is this a dealer by dealer policy? Is this a California-specific policy? Is the dealer who told me this out to lunch?

I'd love to get some kind of answer to this question ASAP because I'm going to try to close on this out-of-state lease deal within the next couple of days. I'd hate to show up in CA to drive my new car home and then be told...sad trombone..."Sorry, buuuuut we actually can't lease you a car. You go home now."

Mr_Shiftright · February 2016

Your lease agreement is between you and the leasing company, so prohibitions on leasing out of state are all part of the leasing contract. Some leasing companies give you the right to move, some do not. Near as I can tell, most only prohibit out-of-country, not out of state--but it is rational to presume that a leasing company might want easy access to the car in case of a repo.

As for registering in another state, that of course varies state to state, but as a rule you have to contact the DMV in the state you are registering the car and get the procedure for registering an out of state lease vehicle. Obviously, your leasing company will have to provide title documentation to your "new" DMV.

Short answer---ask the leasing company handling the lease for the dealer--don't ask the dealer.

jimdandy2 · February 2016

Mr_Shiftright said:
Your lease agreement is between you and the leasing company, so prohibitions on leasing out of state are all part of the leasing contract. Some leasing companies give you the right to move, some do not. Near as I can tell, most only prohibit out-of-country, not out of state--but it is rational to presume that a leasing company might want easy access to the car in case of a repo.

As for registering in another state, that of course varies state to state, but as a rule you have to contact the DMV in the state you are registering the car and get the procedure for registering an out of state lease vehicle. Obviously, your leasing company will have to provide title documentation to your "new" DMV.

Short answer---ask the leasing company handling the lease for the dealer--don't ask the dealer.

Thanks! Great info.

Michaell · February 2016

Some additional info...

1) Some makes have regional leasing numbers, so leasing in different states results in a different lease payment. Volvo, however, is not one of them - their numbers are national. So, no problem there.

2) Tax issues are another state specific issue for leases - you'd probably be best to contact your state department of revenue to see how that would work if you leased a car from CA then registered it in your state. Don't want to be taxed twice, for sure.

I've never heard of a brand prohibiting an out-of-state lease .. back east, it's very common, given the short distances between states (NY/NJ/CT, for example).

Good luck, and keep us informed.

jimdandy2 · February 2016

Michaell, thank you!

I have talked to several Volvo dealers in CA now.

I objected to one of the sales managers using the logic outlined in my OP. He agreed to check on it further and, after conferring with his finance, sales, and DMV managers he said they all agreed they could make the out-of-state lease work. He said the hang-up all had to do with "state DMV and titling".

We'll see what happens there if I end up going with their deal.

Another dealer in CA is still refusing to lease a car to me since I live out of state. He said that they could do the lease for me, but ONLY if I agreed to pay CA sales tax on the lease up front. I need to do more research, but I'm not sure if I paid CA sales tax up front on the lease that I would then be entitled to an offsetting sales tax credit of some sort from my home state. He said that, alternatively, they could maybe do the lease if I have the car immediately towed out of CA so that its wheels never touch the pavement in CA. Wtf?

I asked to see the actual printed, black-and-white policy that establishes the prohibition on out-of-state leases. The sales manager I talked to had not seen it for himself. He simply knew that it could not be done without charging me CA sales tax up front. He made vague references to the notion that the prohibition comes from "the manufacturer" since the car I'm looking for is in "high demand".

I asked again for him to provide me with the CA state law reference or dealership policy bulletin or whatever rule establishes the policy so that I can know and fully assess the cost of what I could potentially be getting myself into. He had nothing for me but said he would try to send me something.

I explained to this dealer that other Volvo dealers in CA are willing to lease me a car. He said that they are inexperienced and don't know what they're doing. I'm going to go all the way to CA to sign for and take delivery of my new car and then find out that the deal can't be done. Maybe he's correct? He said he was just being "straight up" with me and "honest".

I also talked to Volvo Car Financial Services. They told me they have no policy prohibiting out-of-state leases. If a specific dealer has a policy prohibiting out-of-state leases, that is their own individual dealership policy and not something that is mandated by Volvo Car Financial Services.

Finally, I spoke with James Bragg at fightingchance.com. He is a car sales and leasing consumer advocate. He had not heard of the policy before. He has been around a while and seems to know his stuff.

Frustrating.

Michaell · February 2016

I suspect the reluctance may have to do more with the fact that the dealer won't get a chance to earn your service business, which is a big profit center for a dealer.

And, California taxes the monthly payment on a lease, so the comment about collecting the sales tax up front is bunk.

Any particular reason why you are looking to CA dealers to do this deal? Do none of your local dealers have what you want?

jimdandy2 · February 2016

Michaell said:

Any particular reason why you are looking to CA dealers to do this deal? Do none of your local dealers have what you want?

Thanks Michaell. I appreciate the info.

Yep, for whatever reason, it seems the CA dealers have a better supply, and consequently significantly better prices, on the type of vehicle I'm looking for.

quattromike · April 2018

I am having the same issue. I have a California dealer that is willing to discount a car 16% off MSRP, whereas the best I can get in my home state is 12% off MSRP. The dealer at first said they can’t lease me a car out of state, then said that it is merely their policy. An additional discount of several thousand dollars makes it worth my while. At the very least, I’d like to use the California dealer’s offer to leverage dealers in my home state. I suspect it won’t do much good if my local dealers know I can’t lease the car out of California.

kyfdx · April 2018

quattromike said:
I am having the same issue. I have a California dealer that is willing to discount a car 16% off MSRP, whereas the best I can get in my home state is 12% off MSRP. The dealer at first said they can’t lease me a car out of state, then said that it is merely their policy. An additional discount of several thousand dollars makes it worth my while. At the very least, I’d like to use the California dealer’s offer to leverage dealers in my home state. I suspect it won’t do much good if my local dealers know I can’t lease the car out of California.

The chances of someone going across the country to lease a car is virtually nil. You won't have any leverage with your local dealer, regardless of whether you'll actually do it, or not.

Which is also why the CA dealer doesn't want to deal with it. There are plenty of shoppers in CA. They probably don't need your business.

Leasing a car out-of-state prohibited?

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