Is It Possible to Get Out of a Car Lease Early?

Ending a car lease before its scheduled conclusion is possible. This involves financial considerations that vary based on lease terms and chosen exit strategy. Understanding these options and their costs is essential for an informed decision.

Understanding Your Lease Agreement

Carefully review your car lease agreement before considering any early exit strategy. This document outlines the terms and conditions governing your lease, including provisions for early termination.

Locate the early termination clause, detailing fees or calculations for ending the lease prematurely. The agreement also specifies the vehicle’s residual value (estimated worth at lease end) and the purchase option price (amount to buy the vehicle outright).

Identify any early termination fees, disposition fees (a charge for returning the vehicle), or penalties for excess mileage or wear and tear. The lease’s payoff quote is the total amount owed to the leasing company to close out the lease, including the residual value, remaining payments, and applicable fees.

Direct Early Termination

Ending a lease directly with the leasing company involves contacting them for a payoff amount. This amount typically includes remaining lease payments, the vehicle’s residual value, and various fees. The process usually requires returning the vehicle.

This option can be expensive, often requiring payment of a substantial portion of the outstanding lease balance. Costs for direct early termination often include remaining lease payments, an early termination fee, and a disposition fee, which covers the vehicle’s resale preparation.

You may also incur charges for exceeding mileage limits (typically $0.10-$0.25 per mile) or for excessive wear and tear. If the vehicle’s market value is lower than its residual value, you might be responsible for the difference, adding to the cost.

Transferring Your Lease

Transferring your lease to another individual can be a way to exit your agreement without significant early termination penalties. First, verify if your leasing company permits lease transfers, as policies vary.

If allowed, find a suitable transferee through personal networks or specialized online platforms. Once a transferee is found, they must undergo a credit check and be approved by the leasing company to meet financial eligibility.

Common costs include administrative fees charged by the leasing company, typically ranging from $150-$500. The original lessee may remain partially liable if the new lessee defaults, though this varies by contract and policy. Offering an incentive, such as a cash payment, can make your lease more appealing.

Buying Out Your Lease

Purchasing your leased vehicle outright is another option to end your lease early. This process begins by contacting your leasing company for a lease buyout quote. This quote includes the vehicle’s residual value as stated in your contract, plus remaining payments, outstanding fees, and taxes.

You can pay this amount in cash or secure financing through a personal or new car loan. Once paid, the leasing company transfers the vehicle’s title to you, making you the legal owner.

Costs include the buyout price, sales tax, and registration fees, similar to buying any other vehicle. Buying out can be advantageous if the vehicle’s market value is higher than the buyout price, allowing you to sell it for a profit or retain a vehicle worth more than you paid.

Trading In a Leased Vehicle

Trading in a leased vehicle at a dealership simplifies transitioning from your current lease to a new vehicle. When you trade in a leased car, the dealership obtains a payoff quote from your leasing company. This quote represents the amount required to close out your lease, including the residual value and remaining payments.

If the trade-in value of your leased vehicle exceeds this payoff amount, you have positive equity. This can be applied toward the purchase or lease of a new vehicle, potentially lowering monthly payments or upfront costs.

Conversely, if the payoff amount is greater than the trade-in value, you have negative equity, meaning you owe more than the car is worth. This negative equity is commonly rolled into the financing of your new vehicle, increasing the total amount financed and monthly payments.