How to Get Out of a New Auto Lease in California


You just signed a car lease, and you're struck with a severe case of leaser's remorse. Maybe you've realized you overestimated what kind of monthly payments you can handle or maybe you just hate the car. Whatever your reason for wanting to ditch your lease, proceed with caution. California law offers car lease holders protections that go beyond federal law, but dropping a lease could still leave you facing hefty fines. The good news is that you have options to help you get out of the lease and maybe even keep your bank account and credit intact while you do it.

  • Read your lease. Find out what it says about a cooling off period and early lease termination. Some contracts offer drivers a few days to settle into their purchases and a last-minute chance to get out of the deal before everything is final. If your contract has such a provision and you are within that period, return the car to the dealer in accordance with their rules as described in the lease. Outside of that, see if your lease provides any early termination guidelines that let you break your lease under certain circumstances, such as military deployment. If it does, and your circumstances fit, notify the leasing company of your intent to exercise the option.

  • Transfer your lease to another driver. Several online companies, including and, allow people to advertise the leases they need to drop. Drivers looking for cars browse these leases, and when they see something they like, they can apply to take over the lease. Your leasing company will need to approve the potential new leasee's credit--a process that will either be facilitated through the leasing matching company or one that you will need to initiate with the leasing company yourself. Once approved, your name will usually be removed from the lease and the new driver takes over. Note, however, that according to Edmund's, not all leasing companies allow these swaps and some will hold you responsible if the new driver misses payments. Ask your leasing company their policy, and if you are completely released from liability for the car, get it in writing.

  • Break the lease and turn the car in to the dealership. Although this option should be a last resort, under California law, you are legally entitled to break your lease at any time. Your leasing company can charge you a termination fee in accordance with the terms your lease agreement. Fees vary depending on the car's value and how far into your lease you are when you terminate. After your surrender your keys, your leasing company must notify you in writing ten days before they plan to sell your former car as a used car. You can get the vehicle appraised during those ten days, and if your independent car appraiser says the car is worth more than the assigned residual value, the leasing company is required to lower your termination fee. Note, however, that termination fees can still be in the thousands and an early lease termination of this nature will have a negative impact on your credit score.

Tips & Warnings

  • California law does not require cooling off periods in auto contracts, so you only have one if your lease agreement specifically spells it out.

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  • Photo Credit Shiny car with silver paint. Water drops on the hood. Car lamp. image by Christopher Meder from
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