However, there are also some negatives to leasing a car. You might find yourself in trouble If you encounter financial hardship and can no longer comfortably afford either the payment or the cost of fueling the vehicle. A lease might also create problems if you find yourself having to travel more miles than the lease dictates or if you start to regret the decision soon after getting the car. Companies can charge some hefty fees for going over the mileage limits or for turning the car in early.
Getting out a car lease can be tricky, but we’re here to educate you on the available options. Let’s figure this out.
What To Know Before You Get Out of Your Car Lease
Car leases have term and mileage restrictions, which usually last around 12-48 months and include 10,000-15,000 miles per year. If you’ve agreed to 15,000 miles per year for three years, and you drive 8,000 miles the first year, then 18,000 the next two, that works too. As long as the total still comes out to less than 45,000 miles by the end of the term, you’re all good. Furthermore, if you break the terms of the lease to get out early, you are subject to expensive additional fees.
During a lease, it’s important to keep the vehicle in good shape. Scheduled maintenance is crucial, as is keeping all components, including the interior and exterior, in tip-top shape. If you get out of the lease early, you could be faced with additional fees for damaged bodywork, worn interior components, and more.
If the desire to get out of a car lease is proactive rather than reactive, you might want to wait. If you’re in a situation where you can comfortably afford the leased vehicle and will come in under the total mileage limit when the lease is up, you can save yourself time, hassle, and mone by living out the terms. Early termination fees are rough on the pocketbook.
The Documents You Need
All you really need is typical documentation that’s associated with leasing. A photo ID, funds ready to move, and it’s a good idea to know where your credit score is at, just in case. If your intention is to buy out a lease and are financing the remaining value, having a new loan all set and approved ahead of time is important. Leasing companies (as in a financial institution that sometimes is associated with the automaker) often state what the option-to-buy figure is at the end of the lease term, but if this happens before the end of the term, that figure will be higher.
Finally, if you have an individual lined up to transfer the lease to, they’ll have to submit all proper documentation to pass the leasing company’s muster. Don’t fret over this, though, the leasing company will tell the potential new lessee what they’ll need to provide.
How To Get Out of a Car Lease
Here are your options.
1. Transfer
Transfering the new lease to a new lessee could be a very painless and inexpensive way to wash your hands of a lease. Though, the rub is you’ll have to find a new lessee will be approved by the leasing company and who’s interested in the car and the terms that it carries. This obviously can be tough, but services like Swap A Lease and Lease Trader can help. You might also have to throw in a little cash on your end to sweeten the deal, especially if the payment is high or the mileage allowance isn’t very good. There will be transfer fees, and these services have their own additional fees, too.
One the plus side, you could happen upon a new lessee who’s been in search of a lease term or financial commitment that saves your bacon.
2. Early Turn In
Another option is to turn in your lease early. Usually, there will be some kind of early termination fee (also referred to as a disposition fee). You’ll want to read the terms of your lease carefully, as the leasing company might charge one or more of the following other fees: transfer taxes, storage and dealer prep fees, early termination fees, and depreciation costs. Or more!
The key thing to ponder is this: Does it make financial sense to turn in a lease early and pay all associated fees with doing so? For example, it might make sense to turn in an expensive vehicle that gets poor gas mileage. It might make sense to switch to an economy car that not only has a lower lease payment, but also gets better fuel economy. If the trade-in vehicle’s value has barely depreciated, or even appreciated, since you signed the original paperwork, you might get off easier, too.
3. Buy Out
This might be the easiest of all three options. Buying out a lease simply means getting a loan and buying the vehicle from the leasing company. Normally, leasing companies have option-to-purchase figures at the end of the lease. They might charge an additional fee, or fees, to do this.
This could be done by getting a loan from a different financial institution and using it toward the buyout. Some normal consumer lending institutions offer tailored buyout loans, which take the written buyout figure into consideration and help make the process as seamless as possible. Your credit score might be higher than when you first signed for the lease, which could mean a lower interest rate on any potential loan. The process goes like this: Get a new loan to help buy out a leased car, sell to recuperate all costs, and have your hands washed of all obligations. Heck, if you’re able to make a tiny bit of extra profit to recoup some of the monthly payments you made, that’s even better.
So, to summarize, buying out the lease avoids costly termination fees and potential mileage and condition penalties.
FAQs About Getting Out of a Car Lease
I’m not a mind reader, but I do want to try and answer some of the questions you may have. Here are a few common points of confusion sourced from experience and from popular search results.
Q. Should I finance or lease a car?
Q. Why should I keep an eye on my credit throughout the whole process of leasing a car?
A. If your credit score has gone up, you could be in a better situation to get a low interest rate when getting a loan for a new car, or buying out your lease.
Q. I might go over my mileage limit before I turn in my leased car at the agreed upon date. Should I terminate early to avoid this?
A. Not necessarily. Mileage penalties might cost far less than an early termination fee. Consult the terms and conditions of your lease.
Q. Can I negotiate with the leasing company?
Q. Is it better to terminate early in the middle or toward the end of the lease?
A. Typically, the closer to the end of the lease, the better. This is mainly due to depreciation.
Q. Should I work with the dealer or the leasing company directly?
A. Preferably the leasing company, as it cuts out middleman-type fees.
Q. The value of my leased car has gone up a lot over the past year, should I buy out and sell?
A. Make sure you have the exact figure to buy out from the leasing company, and know what you’ll be able to get for it when you sell.
Originally posted 2023-11-19 09:01:28.