by Jen Davis
Photograph by Barry Austin / Photodisc / Getty Images
A sublease allows a person who originally leased or financed a vehicle to lease it to someone else. A person may choose to sublet their car to ease the financial burden of ownership or to earn some extra money. Subleases can be for a period of time as short as a few hours or they can last up to several years, depending on the needs of both parties.
Determine what terms you want to offer for your vehicle. You must decide how long you are willing to allow someone else to use the vehicle, whether or not you will need to use the vehicle during the sublease period, and how much you want to charge someone to sublet the vehicle. Some subleases work in a similar way to renting a car, allowing someone to pay you a flat fee for the use of your car for several days or even several months. Other subleases allow someone to share your car with you, giving them access on certain days of the week or at certain times of the day. This often works well for college students or people who only need a vehicle occasionally. If you rent or finance your car, you should read your own documents carefully and make sure your contracts allow for subleasing.
List your car for sublease. You may want to do this by running an ad in the newspaper or by running a classified ad online. You should describe what you want to do with the car, the terms of the sublease, and how much you plan to charge during the sublease. The amount charged must correspond to the condition of the vehicle and its value. Also, decide how you want to handle auto insurance. In most cases, you will want to require full coverage car insurance during the lease period.
Ask an attorney to write your sublease agreement. The contract must be a complete and binding legal document. Do not try to write the contract yourself. Make sure all terms are fully addressed in the lease and that it describes who will pay for the repairs, maintenance, insurance, and value of the car at the time of lease. You can also limit the number of miles the person can drive within the time period of the lease. Set a firm payment schedule and make it clear that it must be adhered to. You will also want to document in detail how you will handle the situation if the tenant defaults during the sublease period. The more specific your contract, the better protected you and the person renting the car will be in the event of a problem.
Sign the contract in the presence of a notary and the sublease begins.
- Remember that you are still fully responsible for complying with all the terms of your own lease or financing, regardless of what the terms of the sublease are. This means that you are still responsible for making timely vehicle payments, keeping proof of insurance coverage and registration, regardless of what the person renting the vehicle does with it. This means that even if the person to whom you sublet the car stops making the payments or defaults, you will still have to make the payments. Without a high-quality legal contract, you may have no way to recoup your losses if the sublease doesn’t work out.
- If you stop making payments or can’t keep your part of the sublease agreement, the person you are subletting the car to can take you to court for breach of contract.
- Legal issues related to subleasing can vary from state to state. Thoroughly research applicable state laws before subletting your vehicle.