Have you ever wanted to terminate your car lease quite early or are you thinking of taking that plunge? You would be wanting to do that because of your financial constraints or perhaps you are in dire need to go for a brand new car!
Some of these reasons would be prompting you to immediately put an end to the car lease. We’re sure there are numerous, genuine reasons coaxing you to do so. But when you go to the company to terminate your lease, they are waiting to charge you for the dents, dings and maintenance of the car.
Much later, they would again hit you with other fees in the name of unpaid taxes, such as the balance of the lease, transportation and storage of the vehicle fee etc. Rest assured, it is not a cheap option!
All these conditions might already be giving you a headache. But, do not fret, it is not IMPOSSIBLE and there are some solutions and options you can always go for (with some hassles and tensions). It will take some effort, money and your good amount of time. So let’s dive directly into it and see what are the effective methods.
1. Return The Car
Beware! This is not only the most expensive and least recommended option but also a super-fast way to get you out of the lease.
The company will wholeheartedly accept the return of the vehicle. But you may have to pay the penalties described on the agreement. This will include a huge termination fee and the rest of the depreciation fee which will cost you a huge bomb. The company would sell the car on a wholesale auction and lower your payout by the realised value.
If you have money and if you are in dire need to return the vehicle due to several reasons then this is the best option for you.
If you are returning the vehicle due to financial constraints, then let’s be very upfront here, this is not the best option. This is because the penalty is going to cost you a bomb. Let’s see what are the other options. Read further!
2. Transfer Your Lease
If you have never heard of this effective way then here it is. Transfer your lease to a third person using several third party services such as Lease Trader. Considering the positive reviews and our experiences in associating with Lease trader in the past, it deserves some brownie points.
Numerous people would be deeply interested in taking over the remaining term of the lease. There are also plenty of companies that will help you in transferring your lease to a third person.
There are also situations where people have found it extremely difficult to lease an already used car. So make sure that the third person is willing to pay the remaining term of the lease. You can mention it in the agreement between you and the third party.
All you need to do in the beginning is to make sure that transferring your lease to a third person is not against the terms and conditions mentioned in your agreement with the leasing company.
If you are finding it extremely difficult to spot people who are on the lookout for such transfer, Lease trader will help you out for that as well.
This service doesn’t exempt you from paying a transfer fee to the present leasing company (hidden charges are plenty).
A majority of the leasing companies will help you in transferring your lease. So you needn’t worry about it. But another downfall of doing so is that you cannot get your name off the contract. Technically, if the third person doesn’t adhere to the monthly deadlines then you are the one who is going to be responsible. This is called post-transfer liability.
3. Buy The Car, Then Sell It Off (Least Expensive)
Not many are aware of this, but you can actually buy the car from the leasing company. This is normally termed as an early buyout and this is the best way to take your head off the lease. You can buy the vehicle at anytime from the leasing company while the lease is still on for a fixed price.
This is one of the LEAST EXPENSIVE ways to get you out of the lease. So how do you do that?
The resale value of your car has to be more than or equal to the buy out price. For example: You are two years into a 5-year lease and the buyout price of your vehicle is $20,000, here you can definitely buy the car and then sell it off.
But ensure that the resale value of the car is $20,000 or more. If not, don’t keep your hopes high! You can check the resale value of your car using several other online sites such as edmunds.com, kbb.com etc.
If you are doing so, sell your car to a third party. If you have plans of selling your car directly to the dealer then you will only get the wholesale value and not the resale value.
A piece of advice, please do not use a mediator. Using a mediator have always created bigger hassles for many people. Do all your talking directly with the leasing company.
If you are buying the car from the leasing company and selling it to a third person then you have to pay taxes. Of course, rules are different in different states so contact your local DMV office for details.
At the end of the day, you need to know that if you are selling the car to a private party, you have the option of trading the car to a dealer. The only major disadvantage is that it is a loss when you compare it to selling the vehicle outside.
However, the major silver lining of this deal is that the dealer will take care of every paperwork and purchase-related hassles with the company. You don’t even have to worry about the tax.
IMPORTANT TIP – When you are dealing with an outside dealer make sure to get the amount right away.
4. Ask The Leasing Company For Solutions
Some of the leasing companies are quite understanding and dealing with them is really easy. If you think you need some more time in paying back your monthly instalments express it to them.
If they find you to be very genuine and feel you can recover from your financial situation soon, they will give you more time before you terminate your lease. You will definitely have to request for such a deal. There are a few good companies that are ready to offer payment relief for a few months.
This is the best option if you don’t have to end up paying penalties because these well-reputed companies may even lower your monthly payment or suspend it temporarily.
They will agree to this only if your alternative is to default on the lease, because if you do so the leasing company will have to incur the extra costs.
5. Default On The Lease (We DON’T Recommend)
This is not a method we recommend. But some people stop making payments. They are not bothered about the court cases or even if the credit gets accumulated. This is not a solution but the only alternative if you do not have any option in your hand.
You may end up liable to pay thousands of dollars to the leasing company. In several cases, you will not be allowed to even fly out of the country until you settle off your payments.
Due to the very same reason, you may not be allowed to buy any other vehicle from the country. A thorough background check takes place and this makes your life difficult when you require financing for your next vehicle.
We wouldn’t recommend this at any cost. This is because the consequences of not making the monthly instalments are scary and it will have a much bigger impact in future.
But, yes if you have your financial constraints and you do not have any other option you may have to go for this option. But always give priority for other alternatives we have mentioned in this article. We are sure it will help you sort out your problems.
So if you go through all these solutions you will understand it is not a cakewalk. These are the effective ways through which you can get out of your car lease. But it has its share of problems and huge consequences.
So be very careful and think through before you opt for any of these above-mentioned ways. As we mentioned earlier it is doable, but it can never be a piece of cake.