Looking to get out of a car lease early? Here are some tips
When you need a new set of wheels, you can get an amazing lease deal to be able to drive the car that you want. Are you looking for just a little more luxury? It really isn’t that much more expensive with a lease. Is there a certain function you were after? A lease puts it in your price range.
Unfortunately, even with an affordable lease, there are circumstances that may require you to need to get out of it. Maybe you’ve lost your job or had to take on a lot of unexpected expenses. Maybe your job has transferred you to another country. Whatever the reasons, you’re not alone in needing to make the change.
As you might expect, this process can be costly, and there’s a lot of expensive ways to get out of the agreement. If you find yourself in that situation, we’ve got some information that could save you time, money, and aggravation. It can help you make the best decision for your situation.
How costly can it be to get out of a lease? Check your agreement
Getting out of a lease can be expensive because the car dealer needs to ensure that they’re making the money they expected. If a driver terminates a lease early, their ability to profit is lessened. That’s partially why they build in very specific terms as part of the lease agreement.
When you think you need to terminate, the first thing you should do is re-read this agreement to see the terms you’re being held to.
When they ask to terminate a lease early, drivers may be responsible for storage and transportation fees, taxes, preparing the car for resale, or other fees.
So when you’re looking to get out of your lease, how bad can the costs be? What you owe is going to depend on a few factors. Firstly, you need to look for whether your agreement holds you accountable for making all of the lease payments, even if you’re turning in the car.
These fees can be substantial. Suppose your lease sits at just $100 and you want to end the agreement a year early, the remaining payments total $1,200. Most leases are double and triple that amount, if not more.
If you are accountable for making the remaining payments, check to see if there’s a pro-rated factor to what you owe. Some leases ask you to pay just a certain portion of the extra payments. These are higher if you look to terminate earlier in your lease and reduce as the lease gets closer to the turn-in date.
In addition, be aware that some dealers offer an early termination fee in place of repayment for missed leasing months. While this may seem like a better deal, the fees can wind up equaling a large portion of what the missed months would have been. In addition, drivers may be responsible for storage and transportation fees, taxes, preparing the car for resale, or other fees.
Simply turning your car in isn’t the only option
For the most part, the guidelines above apply to people who just want to turn their car into the dealership. It’s the simplest way to get out of the agreement and for those who don’t have a lot of time to figure other options out, it gets the job done. Unfortunately, it is also pretty expensive.
There are better ways to work towards getting out of your lease.
Drivers who are willing to do some out-of-the-box thinking can find other ways to separate themselves from the terms of their lease. These options are more creative and they take some effort but they’re much easier on their wallet.
Transfer the lease
One option for drivers who are looking to get out of their lease without paying an arm and a leg is to try to transfer their lease to another driver. If you’d like to pursue this option, first check to see if it is allowed according to your lease agreement. Many dealers are okay with this, but some aren’t. Before you get too far into the process, know what your dealer will be comfortable with.
Believe it or not, there are many reasons why someone would want to take over just part of your lease. They may be interested in a shorter-term agreement and the flexibility it offers them. They may want to try out a car for a period of time without having a longer commitment. Either way, their needs fit pretty well with yours.
Locating someone to take over your lease may not be as difficult as it sounds. If you ask around, you may find that a friend, colleague, or someone else you know would like to take it over.
If not, there are lease swapping websites available. These sites, like LeaseTrader.com make matches between people looking to get out of a lease and others who want to assume one on a short-term basis.
As you look into this option, keep in mind that details are important. Depending on your situation, you may still be responsible for some of the payments on a transferred lease. In some cases, you may even be viewed as a co-party in the terms of the agreement and remain responsible for the car. Be clear about what you’re getting into and what risks you want to take.
Buy the car and then sell it
Keep in mind that if your dealer has included any fees into the agreement as part of purchasing the car early, resale value should cover this also, as well as any sales tax you may owe as a buyer.
A creative option for getting out of your lease is to go ahead and buy your car from the dealer. Again, you’ll have to check the terms of your lease agreement to understand how this can work. However, most agreements do allow for a driver to make the purchase at some point during the course of the lease.
This sounds too good to be true, but this option has made sense for some drivers. It works particularly well when resale value equals or exceeds the cost of getting out of the lease by simply returning it to the dealer.
Once you buy the car, you can sell it to another owner, quickly recouping the costs of the purchase (including taxes). If your dealer has included any fees into the agreement as part of purchasing the car early, resale value should cover this also.
Rollover the lease into a car purchase
Another of the tricks to getting out of your lease early is to talk to the dealer about making a new agreement to lease or sell a different vehicle. Depending on the reasons why you are looking to terminate your lease, this option can help you out. It can allow you affordably move into a new vehicle that’s in line with what you want to pay.
Your dealer may be more than happy to allow you to roll your lease over into a new agreement with them. It could be the ultimate win-win situation.
If you’d like to pursue this option, keep in mind that the dealer may be more than happy to work with you on securing favorable terms for the transaction. They want to keep you as a loyal customer and would like to keep you driving their vehicles for the long term.
It may be in their best interest to have you in a completely different agreement and sell your current vehicle for more money than they may have made on the lease.
Strategies to avoid
If you find that you need to get out of your agreement early, it can be a stressful experience. Like most stressful experiences, this situation can cause you to make mistakes under pressure. Don’t cave when times get tough. Keep calm, think things through, and try not to make decisions that wind up being financial mistakes.
One of the biggest mistakes you can make in this situation is to simply stop making the lease payments. Sure, this will ultimately get you out of your agreement, but it puts a hefty ding on your credit rating. It is the equivalent of defaulting on your car loans. Just don’t do it.
Another tactic to avoid if you’re in this situation is to make a decision without fully understanding what is in the terms of your lease agreement. Taking a look at the agreement is detailed and time-consuming, but it is worth the effort. Knowing what you can and can’t do will save you time and money in the long run.
In the end, if you’re armed with the right information and are determined to meticulously act in your own best interest, you’ll be able to make the best out of an unfortunate situation. While the need to get out of a lease happens, the terms can be more favorable than you’d expect.
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