How to get out of a Car Lease

There are ways to terminate your car lease early. Find out how.

 

There are times when you may need to get out of a car lease. Perhaps the car no longer fits your needs due to a growing family, or maybe you are having a hard time making the monthly payments. No matter what the reason may be for your need to terminate a lease, you have options.

 

Getting out of an auto lease can be a costly proposition and it can take time to maneuver out of your contract. Early termination can be very expensive, but thankfully, there are other ways to get out of your car lease.

 

Your leasing company may offer the option for you to terminate your lease early. This means that you will not have to pay for the leased vehicle anymore, but it also means you'll have to turn in the car, pay the balance due on the vehicle, and pay any fees and penalties that come with early termination of the lease.

 

According to Credit Karma, when you first take out a car lease, the federal Consumer Leasing Act requires that details for terminating your lease early to be disclosed in the lease agreement. Read your contract carefully. You will likely find that the car leasing company will charge you an early termination fee. This is normally the difference between the balance owed and the credit you get for the current value of the car. Calculations for this fee are spelled out in your lease contract.

 

You will likely also have to pay a vehicle disposal fee which typically runs $300 to $400 and covers the dealer's costs of putting the car back on the market to sell it as a used car. There are also transfer fees and taxes to be paid when you turn in the vehicle.

 

If you are thinking about terminating your car lease, call the leasing company and ask them what you would have to pay to terminate the lease early. Depending on your lease terms and how early you are getting out of the deal, it might cost you several thousand dollars.

 

Obviously, the earlier you terminate the lease, the more you'll pay to get out of it. That's because the car depreciates more when it is new. The cost to terminate might well cost you more than just keeping the vehicle for the full term of the lease. Yikes!

 

Luckily, there are other ways to get out of a car lease early. One option is to transfer your car lease to a new person. First, you will have to make sure that a lease transfer is legal in your state of residence, that it is permitted according to the lease contract, and that the person who will be taking over the lease meets the credit requirements of your leasing company. Over 80 percent of car leases allow for transfers with no strings attached.

 

First, do your research and find out if a lease transfer will save you money over terminating the lease early. After all, you will still have to pay a lease transfer fee

and possibly other fees.

 

How do you find a person who is willing to take over your car lease? There are services such as swapalease.com that will connect you with people who are looking for a car lease to assume. There are also companies like rodo.com that will buy you out of your lease for cash.

 

Speaking of which, you may also be able to purchase your lease vehicle. You can pay the early buyout amount along with the fees that go with it, and then sell the car yourself. A lease buyout might be a better option than either an expensive lease termination or a lease transfer.

 

Run the numbers and see if this option makes sense for you. Remember that if you don't have the funds to pay the buyout fees, you'll have to take a lease buyout loan for the buyout amount. However, your loan monthly payment could be less than your current lease payment. 

 

In the event that the market value of your lease car is higher than the residual value listed on your lease contract, a lease buyout might be the way to go.

 

If the cost of terminating your lease early is less than the remaining amount you'll pay to the keep the lease, an early termination might work for you. However, if the cost of terminating early is more than the cost to continue to pay for the remaining part of the lease, you would be better off hanging on to the car and returning it at the end of the lease period.

 

If you are having a hard time making your lease payment each month, sometimes your leasing company can help you. Contact them and let them know you are having financial trouble in making your lease payments. They might be able to reduce your monthly payment by extending the lease rather than lose you as a customer.