• Buying Guides

How to Get Out of a Car Lease Early

By Autolist Staff | March 5, 2019

Can you get out of a car lease early? The answer is yes, but the options do not always have desirable results. Unfortunately, the purpose of leasing is to give you the opportunity to drive a cutting-edge vehicle for less. When you get out of the lease, your savings in this area largely go out the window. If you're wondering how to end a car lease early, then continue reading for the following common methods.

How To Get Out of A Car Lease Early Through Default

Probably the worst way to end a car lease early is by not making your payments on time or not making them at all. When you do that, it causes the leasing company to take a range of actions, and none of them are pleasant. The first thing they will be able to do is destroy your credit by reporting you as defaulting on your lease agreement. They can also repossess your leased vehicle and add the cost of repossession to how much they're charging you. This is not allowed in every state, but it is allowed in most states. Thirdly, they can tack on early termination fees, which are dictated by the lease contract, plus the rest of the lease payments. If you still refuse to pay, they can sue you and use other means to collect the remainder of the debt. If they're granted a judgment against you, that will also lower your credit score. Leasing a car is usually only possible for those with high credit, so defaulting on a lease is very likely to ruin credit that you've worked hard to build. A default should be your very last resort in getting out of a car lease early.

Getting Out of a Car Lease Through Early Termination

In terms of good and bad ways to get out of a car lease early, early termination is much further down on the scale than defaulting. Take a close look at the termination clause in your lease agreement to find out if there are ways to get out without totally ruining your credit. The contract terms vary, but in many cases, you'll still be on the line for early termination fees and possibly even more to fulfill remaining lease payments. Further, if you've exceeded your mileage allowance or if the car is damaged or excessively worn, you will likely be responsible for any related costs there as well. Any security deposit that you put down will now be applied to the remainder of the money that you owe. Unfortunately, getting out of a lease this way is almost always going to cost a lot of money, which is not always an option if financial hardship is what is making you need to get out of the lease. One thing to remember is that you should always talk to the leasing company when finding out how to end a car lease early. The dealership no longer has responsibility or interest in the lease after the deal is completed.

Lease Buyout and Sale

Next up on the scale of how to get out of a car lease early is figuring out how to get a lease buyout and sale. This requires some really good timing and a lot of work, but it is possible. It can also save you bundles of money and avoid credit damage. Just about every lease has a total buyout amount that goes down as you make more payments. Start by calling your leasing company to find out that buyout amount. Make sure that you are quoted the out-door-price, which should include any costs or fees as well as security deposit credits. While you're on the phone, find out if there are any restrictions on selling the car. The next step is to sell the car for around the payoff amount. Once you have the money, you can buy out the leasing company and obtain the title for the new owner. However, this does require some timing and understanding. The buyer will need to understand that it's a lease buyout and that you won't be able to immediately present them with the title. Furthermore, you will likely want to get the best market value for the vehicle. This is usually why selling to a private party is the best way to go. Dealerships won't generally give you much more than wholesale value for the car. However, in some cases, this might be enough, and they will reduce the stress by completing paperwork and the payoff transaction.

Lease a New Car

If you need to get out of the lease mainly because you want a new vehicle due to changing circumstances, then you might have an even better route to get out of your lease early. The first step is to go back to the dealership where you got the first lease. Going back to the same dealership gives you a little goodwill to work with as they may be more willing to reduce some fees in order to keep your business. There is a catch to this route as well, however. If you end up with a lease balance above your buyout value, then that amount will be rolled into the capitalized cost of the new lease, which results in you making payments on two cars. This doesn't make much financial sense unless you only have a few months left on your contract. For example, if your buyout is $20,000 but your car is only worth $17,000, then that $3,000 difference will be added to your new vehicle. Doing this sort of thing drastically increases the chances of having negative equity in your vehicle.

Lease Swap

Lease swaps and assumptions are much easier these days with websites specifically dedicated to swapping leases. Lease swaps are simple on the surface. You start by paying a fee to list the vehicle and then add photos and descriptions just like a used car ad. When a buyer contacts you to swap the lease, you will then need to pay a transfer initiation fee so that the website company can handle the paperwork. Your lease company might also want a lease transfer fee. Make sure to check with your leasing company before doing this as some contracts have specific wording to forbid swapping or assumptions. It's also important to find out how the lease swap will happen. Sometimes they allow full assumption, which means that you are completely off the hook for any future problems. However, in some cases, they will keep you on the documents, which basically functions as adding you as a co-signer. This could make you responsible for anything negative that the new lessee does.

Figure Out How to Continue Making Payments

Finally, the easier-said-than-done way of avoiding pitfalls and hassles of getting out of a car lease early is to figure out how to keep making your payments. You might consider signing up for delivering packages, or food, or using your car as a rideshare. There are several companies and apps for freelance delivery and ride-hailing. Make sure to check with your leasing company that this is allowed and consider the mileage allowed by your contract.

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