Renting a car is a great way to enjoy the perks of driving a beautiful vehicle without the hassle of long-term maintenance or searching for a buyer when you’re done with it. It’s also nice because you know exactly how long you’ll be committed to the car you’re driving.
Read Your Agreement Carefully
Although you may have read this when you first signed the contract, it’s good to read it again with this in mind. Is there anything in here that penalizes you for ending the contract early? In the majority of cases, there will be penalties. But you should also look for any exceptions or circumstances under which you might avoid these penalties.
Try to Find Someone to Take Over Your Lease
This isn’t a perfect solution, and you can’t just pick anyone off the street. Some dealers may not allow you to transfer the contract at all. And there are many restrictions on the type of person who can take over your lease and when they can do so. However, there are many companies that allow a transfer for a fee much lower than the typical cost of continuing the lease.
Several sites operate mainly as dating sites for cars – where people with leases looking to get rid of them post their offers, and people interested in taking over a lease respond to the offers that catch their attention. It’s also a good idea to ask your friends and family members if they or anyone they know is interested.
Note: If you want to find someone to take over your lease, be aware that they will need to have good credit and be approved by the company. Some dealers, unfortunately, might still hold you responsible if the car suffers any damage.
Trade It In for Another Car
This isn’t a good idea if you need to end the lease because you’re leaving the country or facing financial problems. But if you just want to drive a different type of vehicle, you can certainly switch to a different car. You may have to pay an early termination fee, but generally, you won’t be obligated to the remaining payments on the current lease. Also, switching to a less expensive model could lower your monthly payments – or at least it doesn’t hurt to ask.
Use the Early Purchase Option
Part of the appeal of leasing is that if you ever decide you want to purchase the car you’re driving instead of just continuing to make monthly payments on it, you have the option to do so through an early purchase mechanism, where the company will calculate the fair market value of the car you’re driving plus the amount you’ve already paid in lease payments. If you’re ambitious and have the cash, it might be worth your time to buy the car from the lessor and try to sell it.
Note: Once you purchase the car, you can try to sell it to a dealer (this is only worth it if you paid less than the Kelly Blue Book price for it) or to a friend or family member – or someone you meet via Craigslist. Even if you lose money, you may lose less than you would have by paying the remaining term of the lease and penalties.
Or… Just Wait
This may seem obvious, but you don’t have to use the car every day you have it on lease. If you’re only hoping to end the lease a few months early because you’re moving to another state, try leaving the car with a friend (of course, they can’t drive it!) and simply return it when the contract ends. Especially if you only have a few months left on your lease, this may be the most cost-effective option.
In
In most cases, it’s only worth terminating a lease if you have a serious and unavoidable reason to do so. But if that’s not the case, you’re probably better off driving the car you signed for until the end of the lease. It may not be the car of your dreams or the best car for your situation, but the cost or inconvenience of trying to withdraw early may not be worth it.
Frequently Asked Questions (FAQs)
How much does it cost to return a leased car early? When terminating a lease early, you will be responsible for paying an early termination fee. This fee is the difference between the remaining amount on the lease and the actual value of the car. For example, if you still owe $18,000 and the actual value of the car is $15,000, you would owe $3,000.
Does terminating a car lease early affect your credit? Yes and no. If you are unable to make your lease payments or stop paying, it can negatively affect your credit score. However, if you are able to transfer the lease to someone else, terminating the car lease early will not affect your credit at all.
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Sources:
Comprehensive Consumer Guide. “End-of-Lease Costs: Closed-End Leases.”
Experian. “Does Breaking a Lease Affect Your Credit?”
Source: https://www.thebalancemoney.com/how-to-break-your-car-lease-without-a-penalty-4156676
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