The buy versus lease debate has raged since the auto lease became popular but one thing is for certain about a lease: You aren’t going to end it early without paying a lot of money to do it. The recent economic headwinds have caused a rise in not only lease defaults but also people who, due to a job loss or other economic event, want to terminate their lease early. When they call the leasing company or go to the dealership where they leased the vehicle, they learn that early termination of a lease is difficult and expensive.
Why? Because the monthly payment for your car lease is calculated with the assumption that you’re going to hold the lease through the end of the term. If you don’t, the leasing company loses a lot of money in part, because they have to recoup the cost they incur for the depreciation of the car. The earlier you terminate your lease, the less money they recoup. Although you’re probably going to have to pay something to get out of your lease, there are ways to greatly minimize the payment.
Pay It Off
This is the least attractive option. Not only are they going to charge you for all or a portion of the remaining payments but they will tack on an early termination fee, mileage overage fees, and other fees. This is so they can avoid losses but also to discourage you from terminating the contract early. In most cases attempting to terminate your lease isn’t going to save you a lot of money. The payoff amount is too high and if you have to pay for it anyway, you might as well drive it.
As you get closer to the end of your lease, car dealerships will be more willing to work with you if you are planning to lease or purchase another vehicle from them. In some cases, for very little out of pocket, you can trade in your currently leased vehicle early and buy or lease a new model. Make sure the car is clean, has no damage, and all current payments are made. Again, this isn’t going to be the best deal for you but it is easy to complete.
Transfer the Lease
Not all leasing companies allow this but if your company does, you can transfer your remaining lease to somebody else for the balance of the term. This relieves you of all further responsibility and doesn’t cause damage to your credit score. It may not be as hard to find a person willing to take over your lease as you think. There are online services like swapalease.com that will not only match you to somebody willing to take your lease but they will also work with your leasing company to facilitate the paperwork involved. They do all of this for a fee that is still much less than paying off the lease. Do not find somebody on your own and allow them to take over payments but keep your name on the lease. This is a violation of your lease agreement.
You should never sign a lease if you believe that you won’t be able to fulfill the entire contract. Regardless of the method you would use to terminate your lease early, it’s going to cost you and sometimes the cost is substantial.
(Photo: brunociampi )