Leasing a new car instead of buying one is becoming more and more popular each day. However, while there are many nice places to lease your vehicle from – such as Haines Lease – and many reasons to do so, sometimes life gets in the way, and you have to end your car lease early.
This process can be convoluted, tricky, and even expensive if you don’t know what to do. So keep reading to find out more about your options to end your car lease the smart way prematurely.
Transfer your lease
Among your available options, this one is the least troublesome and the most popular. All you have to do is find someone ready and willing to take on the lease and all the duties and obligations that come with it from you.
You can even use a specialized site such as Swap A Lease or Lease Trader to help you facilitate the whole process.
Remember that this is not as simple as simply transferring the whole deal onto another person or company. You will still have to pay a transfer fee that can be as high as five hundred dollars. In addition, there might be some other additional costs depending on your mileage and how much money you have already put down on the lease. In general, expect to pay a lease incentive either way.
Finally, remember that your name will stay on the lease in most cases even after you transfer it. You will still be on the contract and responsible if that other person stops making payments. So choose your transferring partner carefully.
Sell or trade the vehicle
While it is common knowledge that you can buy the car you are leasing at the end of your lease; many people don’t know that they can do so at any time during the contract.
If you can find a buyer for your car, this option – called an early buyout – can be an excellent option for you to get out of the lease for your vehicle. That is, of course, provided that you already have a buyer that is waiting to buy your car.
If you choose this route, make sure to deal with the leasing company directly and not a car dealership. Even then, expect to end with a loss. The payoff amount will include the depreciation cost increased for an early termination fee of up to five hundred dollars.
Besides, be prepared to pay significantly more than similar cars are worth on the secondary market. Overall the higher downpayment you made when leasing the vehicle initially, the better off you will be if you choose this option. Don’t forget that you will also have to pay taxes.
One way to avoid paying taxes is to trade the car directly at the dealership. However, they will be paying you a wholesale value that will be lower than the amount of money you would make if you were to sell that car to a 3rd party.
Buy the car and keep it yourself
When you are forced to end the lease prematurely, returning the vehicle and paying the penalties is the worst thing you can do.
On top of the remaining deprecation of the vehicle, you will also have to pay a substantial termination fee. The leasing company will sell the car at a wholesale auction and reduce your expenses for that amount. But the problem is that is the smallest possible amount of money you could get for that vehicle.
That is why you should consider buying the car and keeping it before opting for the nuclear option. Bizarrely the cost of a lease buyout loan can sometimes be lower than the loan itself. So if you are forced to end your car loan early due to some financial troubles, this might be the right step to make.
Sometimes even that same dealership that you rented the vehicle from initially can have attractive lease buyout financing options as well.
On the flip side, your monthly costs will be lower but – more likely than not – you will end up paying for an even more extended period than you initially anticipated.
If you are in a rough financial spot, consider paying a visit to an auto refinancing lender. If your buyout price is high, some of these places might even offer you a loan that is more than the car is worth. That can be a quick fix for your current financial difficulties.