Acquiring a vehicle through leasing is a savvy financial decision that allows you to enjoy the benefits of a reliable vehicle without incurring the high costs of ownership. However, as time goes by, your preferences and needs may evolve, leaving you contemplating whether to upgrade to a new car or even give up driving altogether. In such a scenario, you may be left pondering whether to continue paying off the monthly lease fees or to terminate the contract.
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Is it possible to get out of a car lease?
Car leases are not ‘do or die.’ You can choose to end the contract halfway through it or wait till the end of the lease to return the car even if you don’t need it anymore. Some dealers may charge a fee to end the lease contract early, while others may not. However, with some of the steps that will be mentioned in this article, you can avoid paying any fee.
Six ways to get out of a car lease
The six ways to end a car lease contract include seeing it through, early termination, lease trade-in, lease transfer, and lease buyout. We will discuss these in more detail below.
1. Seeing it through
Assume you have just signed a 24-month lease agreement for a car, and six months down the line, you get a car gift or enough money to buy and own a car; you wouldn’t need the leased car anymore and will have to stop paying the monthly lease fees. You would want to end the lease, but maybe you don’t have to.
You may consider a few options, where you can keep paying for the car and use it for a different purpose. Consider gifting it to a loved one or using it as a spare car to reduce the strain on your other car during the lease.
However, there are situations where you no longer need the leased car because it doesn’t fit the type of car you want, you just want a new lease deal for a better car, or you feel ripped off. In situations like these, you will find some helpful tips in the following paragraphs of this article.
2. Early termination
As mentioned earlier, car lease deals are not ‘do or die.’ This is why the dealer will give you an early termination option at the beginning of the lease. The dealer charges an early termination fee that you must agree to. This fee is usually calculated by subtracting the car’s estimated worth from the remaining money you owe at the time of termination.
It is important to carefully read every form or document you sign at the beginning of the lease contract, as you may be charged other fees like taxes for vehicle disposal. By determining the early termination cost early on, you can easily calculate how much you will pay to terminate the lease and see if you will be at a loss.
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Also, the earlier you terminate the lease, the more residual cost you will have to pay. This is because cars usually depreciate faster during the first year. If you can continue with the car into the second year, you may have to pay less to terminate the contract.
3. Lease trade-in
A lease trade-in is another option your dealer will present to you at the beginning of the deal. A lease trade-in option allows you to return your current car and replace it with another one. Lease trade-ins will help you either upgrade your current car or choose a smaller one and pay lesser fees.
Note that some lease trade-in options come with an early termination fee. You need to read and understand the documents or have them adequately explained to you by the dealer before signing them.
Also, a new lease will affect your credit score. This is because, with every car lease, your credit score reduces and gradually increases as you pay the monthly fees consistently. When you return the vehicle for a trade-in, you may not yet have enough credit score. However, your dealer could be considerate and let you exchange cars without minding credit scores.
Finally, you are entitled to some credit if the dealer’s buyout amount is less than the car’s residual value at the time of termination. If the buyout amount is more than the residual value, you would have to pay the difference before getting the new car or agree to add it to the monthly fees you pay on the new vehicle.
4. Lease transfer
A lease transfer allows you to lease the car out to another person who needs it and have them pay the monthly lease fees instead. It is one of the most cost-effective ways to release yourself from a lease. However, you must first confirm with your dealer if they approve of it.
Note that the dealer only recognizes you in the deal and will have to come to you with any discussion, not the new lessee. It also behooves you to run a thorough background check on whoever you lease the car to, as you will be held liable if anything happens to the car.
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However, depending on your agreement with the dealer, you may be relieved of the responsibility and have it fully transferred to the new lessee. If you don’t want to go through the stress, you can speak with your dealer to find a new lessee for you.
5. Lease buyout.
This is the easiest and fastest way to get out of a lease early. You may also wait till the end of the lease deal to use this option if you want to get the best deals.
A lease buyout deal allows you to pay the estimated cost of the car at the end of the lease period to own it fully. However, if you would like to end the lease and buy the car halfway into the lease, you should be aware of the finance charges that come with it. It will already be broken down in the lease documents you sign at the start of the deal.
A lease buyout may sound interesting when you think about it, but it may not always be the right option to choose. You may be paying far more than what the car is worth if you do not research the car properly. Note that you will also have to deduct the amount you have already paid for the car from the current cost of it to get the actual figure.
6. File for bankruptcy
Filing for bankruptcy should be your last resort and for a good cause. Bankruptcy means that you no longer have the financial means to continue paying the monthly lease fees. It will drastically reduce your credit score and may prevent you from ever finding a loan option from any institution.
It should not be your first option when trying to get out of a car lease. However, if you have really gone bankrupt and the dealer is taking legal action against you, you should consider filing for bankruptcy. This means that you no longer have to pay the loan.
A court may rule that you sell your property to service the loan to the fullest. If you have no real property to sell, it would be a loss to the dealer and you, which means you will not get a loan anywhere else.
Talk With A Professional
Don’t wait any longer to drive the car of your dreams! At Capital Motor Cars, we offer unbeatable leasing deals on the latest and greatest vehicles. Our friendly and knowledgeable staff is ready to assist you in finding the perfect car to fit your needs and budget. Don’t miss out on this opportunity to upgrade your ride and make a smart financial decision. Call us today at (insert phone number) to learn more about our leasing options and to schedule a test drive.