Getting Out of a Car Lease
Despite the popular belief that you cannot get out of a lease, you actually can. Some options are much more expensive than others, but your manufacturer may allow you to end your lease without penalty if you purchase or lease another new car up to one year before your lease has ended. You can also transfer your lease if your leasing facility allows it, or trade your car in towards a purchase if it has depriciated apropriately. Explore your options and get out of your lease early.
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Instructions
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Dealership Transaction or Private Sale
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Call your leasing institution. Ask if the bank offers a "pull-ahead program," or penalty-free, early lease termination in the event of a new purchase or lease.
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Ask the banking representative for the buy-out amount of your lease. This is the cost to own it outright, which is what you can sell it for privately or hope to get for a trade-in amount. Write this number down.
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Work with a dealership if any of the above conditions apply to your lease. To take advantage of a pull-ahead program, you'll have to purchase or lease a new vehicle. Go to a same-make dealership to see if another finance or lease would work for you.
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Trade-in your vehicle if you prefer. Bring your car to a dealership to see if its trade-in value is sufficient. If the car has depreciated appropriately, which is a leasing risk assumed by the bank, you can trade it in towards another vehicle of your choice, not just one of the same make.
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Sell your vehicle on your own if you do not want to purchase another car. Use the buy-out amount as your guideline. You'll have to supply this amount to obtain a lien release from the leasing facility.
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Check the Kelley Blue Book value to determine your car's worth. Sell your car for the buy-out amount, as you must supply the sale amount to the leasing institution -- discuss any payoff details with the bank before hand so you know how long it takes to get the lien release. If you can sell it for more than the buy-out amount you can keep the profit, but if the sale warrants you less, you'll have to come up with the remaining cash.
Lease Termination or Reposession
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Call the leasing bank and ask if a lease transfer, or transferring the lease to someone else, is an option. Find out what your early termination costs are, or the amount to end your lease and walk away. This is usually significant and includes any payments due in addition to any bank penalty fees.
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Go to the LeaseTrader or Swapalease website to list your car for a lease transfer advertisement. Neither service is free, but can help you end your lease if your leasing bank allows. Many people shop for lease transfers.
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Sign any paperwork as required by your bank if you do find someone to take over your lease. Follow your state's motor vehicle requirements, such as returning your plates as soon as possible.
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Bring your car back to a same-make dealership if you choose to terminate the lease or complete a voluntary repossession, which can greatly damage your credit. Bring all vehicle items, such as keys and the owner's manual.
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Sign any paperwork required at the dealership for your lease termination or repossession, which differs by bank and dealership. Remove your plates and ask to keep a copy of the paperwork you filled out. Pay any remaining costs for your termination to the leasing institution once you are notified of final cost (you should receive a letter).
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Tips & Warnings
Dealerships are more than happy to work with you to end your lease and sell you a new car. Making an appointment to explore your options hould prove worthwhile.
Some new cars offer rebates, which help to cover up your negative equity for a trade-in, if any. Or, the dealer can let you know how much money you can expect to put down towards a new purchase.
Discuss any lease-end intentions with your bank before you take action. The leasing bank may be able to offer a solution to a problem you're currently experiencing. Also, the bank can guide you through your lease-end process, whichever you choose to do, and ensure you complete necessary paperwork.
References
Resources
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