Leasing a car instead of purchasing a car offers you several distinct advantages. With depreciation greatest after year one of ownership, leasing a car means you are not on the hook for the reduced car value. You do not need to put much, if anything down when you lease a vehicle. Think about the joy of receiving a new car every three years or so, as well as no major repair and maintenance responsibilities. Sometimes, things change financially or logistically and you need to leave the world of vehicle leasing for the world of car ownership.
You need to learn how to get out of a car lease.
Use a Third Party Service
Most dealerships and leasing companies typically prefer you transfer a car lease to another customer. Even if you transfer the lease to a third party, your name remains on the contract. If the person using the lease stops making monthly payments, you assume financial responsibility for covering the delinquent debt. Moreover, transferring a lease to a third party can cost you between $50 and $500. You might also have to offer an incentive to the person taking over the lease by sending a lump sum that lowers the monthly lease payments.
Buy, and then Sell the Vehicle
Many consumers do not know they can buy a leased car from the leasing company or car dealership. Referred to as an early buyout, the how to get out of a lease strategy is sometimes a great way to shed the legal obligations of a vehicle lease. The first order of business involves determining the amount of the buyout. You can expect to pay an early lease termination fee between $200 and $500. After calculating what it costs to buy out the lease, you have to estimate how much you can receive for selling the vehicle. For example, your buyout cost for a car runs $22,000, research tells you the car goes for only $16,000.
When the buyout cost exceeds the value of a leased vehicle, you must turn to another method for how to get out of a car lease.
Purchase a New Vehicle from the Same Dealer
Buying a new car from the same dealer does not eliminate all the early termination charges, but it can save you money by negotiating a lower selling price for the new car. Many dealers prefer to sell cars to capture more revenue, as well as reduce inventory costs. A dealer might choose to lower or cancel some or all of the early termination fees, instead of reducing the sticker price of a new car. Remember to read the fine print to avoid paying exit fees that some dealerships hide in leasing contracts.
Return Car and Pay the Fees and Penalties
Circumstances sometimes require you to return a leased vehicle and pay the early termination penalties. You might receive a promotion and have to relocate across country or you need a large SUV to accommodate a growing family. Whatever the reason for early termination, you still have to deal with one or more of the following penalties:
- Pay what remains on the lease contract
- Early termination fee
- Storage and transportation costs
- Costs generated by marketing the car for sale
- Sales taxes
Ouch! That is what you can expect to feel if you go down the path of a lease default. You have the option to stop sending payments, but then your credit goes south and/or the leasing company decides to take you to court. Defaulting on a lease contract represents the method of last resort for consumers who need to know how to get out of a car lease.
When you terminate a car lease, you potentially make one of the worst financial decisions. Every option requires you to pay some amount of money for a car lease termination. Yet, your finances might be in terrible shape, which forces you to take drastic measures to remove car lease payments from the monthly budget. When all seems lost, try to work with the leasing company or auto dealership to restructure the lease contract. If you show the leasing company or car dealer evidence that you will regain your previous financial health within a few months, the leasing company or auto dealer might lower the monthly payments or even temporarily halt the monthly payments.