How to Exit a Car Lease

Exiting a car lease early is possible, especially if your car is in good condition.

A car lease is made by a leasing company which buys vehicles from a car dealership. If you leased your car, exiting a lease agreement early is possible. The best options are to find someone to take over the lease, or sell the car yourself. Walking away from the lease is another option, but it leaves a bad mark on your credit report.

Instructions

Lease Takeover

1. Call the leasing company and find out if "assumptions" are allowed. Make sure the mileage you've put on your car is appropriate for this point in the lease.

2. Find a new lessee who wants your car, and can take over the payments. A good resource for finding a new lessee is Swapalease.com, which helps you through the entire process.

3. Evaluate your car's condition for hand over to the lessee. A car in good condition has the following: balanced tires that match, with no uneven wearing patterns, no chips in the paint, no major dings in the body, clean interior, current license, registration and inspection and no major mechanical problems. Have the car detailed and get a tune-up if necessary.

4. Transfer the lease to the new owner. Go with the new lessee to the leasing company and fill out the required transfer paperwork. According to the Edmunds website, there is usually an assumption fee around $300. An assumption fee is the money a lender charges to transfer a lease.

Sell the Car

1. Call the leasing bank and inquire about the buyout price. The buyout price is the amount the bank is willing to sell the car title to the lessee.

2. Search the true market value of the car, or the individual sale price. Adjust the price of your car for mileage, color and region you are selling it in. A good resource for this is the "True Market Value" guide found on Edmunds.com. You can also can check www.nadaguides.com or www.kbb.com.

3. Compare the sale price with the bank's buyout price. If they are close, find a buyer, and pay the bank yourself. You may take a loss of a $1000 to $2000. Once you purchase the car from the bank, the title needs to be transferred to the new owner of the vehicle.

Tips & Warnings

• Two types of lease agreements are available: closed-end leases and open-end leases. Closed-end leases offer the option of turning the car in, or purchasing it at the end of the contract. In an open-end lease, the car's market price is determined at the end of the contract and compared to the predetermined value of the car. Then the lessee pays the difference.

• The person taking over the lease must pass an approved credit check to be eligible to take over a lease.

References

• Edmunds: Leasing Tips
• Swapalease: Seller- How it Works

Resources

• Automotive.com: Leasing Facts
• Edmunds: True Market Value Pricing Information Center
• Nada Guides: Car Pricing
• "Kelley Blue Book"; Kelley Blue Book, Inc.; 2009