Is your monthly payment on a car lease too much for your budget? Do you want or need to get out of this vehicle and into another one, or don’t need a car at all anymore? You can’t just turn in the car to the leasing company and walk away. You’ve signed a contract and are obligated according to the terms specified in the lease.
What can you do to get out of a car lease? Here are two options.
Turn the car in and pay the leasing company what’s still owed. This may sound like a no-brainer, but it’s not always the best option. Why? The amount you still owe on the lease is likely a lot higher than you realize. In actuality, there’s no way you can figure out the total amount you owe by yourself. That’s because the leasing company has its own calculations for determining the early termination costs. This amount, along with any remaining monthly lease payments, may be considerable, adding up to thousands of dollars over what you expect.
Contact the lease company to get an exact early-return payoff. This amount is based on what’s called “realized value,” which is either the estimated or actual value the lease company would get from the sale of the car at auction.
If the early-return payoff isn’t extraordinarily high – it’s likely to be less the closer you are to the end of your lease than if you’re trying to end the lease in the first year of a three-year lease – you can exercise this option and terminate your lease early.
If not, there’s always option two.
Transfer the lease to someone else. This process is also known as lease assumption, and is a less expensive and increasingly popular way for consumers to exit a car lease early. Two well-known car lease transfer services are SwapALease.com and LeaseTrader, both of which provide consumers options to get out of or into a car lease simply and inexpensively.
The benefits of a lease transfer or lease assumption are that there are no penalties or payoff fees, you just pay a small transfer fee and you can get out of your existing lease without it affecting your credit rating.
How does it work? In short, you register for the service, take photos of your vehicle and list it on the site, following the steps the particular lease swap service outlines. Potential buyers (people who want to take over the lease on your car) have to be approved before the actual lease transfer can take place. The lease swap company takes care of guiding you through the process with your leasing company. You sign the transfer paperwork, paying any necessary fees to the leasing company, turn over your vehicle to the new lessee, and you’re free and clear of your lease.
Another way out. There is a third option and that involves getting a buyout price from the leasing company, placing ads in the paper, online and in the car, and selling the car yourself, paying off the leasing company with the proceeds from the sale. There is the possibility, though, that you’ll have to pay more than you’ll get from the sale. And, before you can sell the car to someone else, you have to pay off the leasing company first. You could be on the hook for money in the interim, or pay more out than you take in.
Which choice is best? Run the numbers and determine what works. You might want to economize in other budgetary areas, stick it out with the lease, and make a better car purchase or leasing choice the next time around.