Owning and driving a car is a necessity, although some people struggling with financial constraints may not have the means to own one. The best you can do is lease the vehicle, drive it for a certain time, and make monthly payments for the service.
According to Statista, over one-fifth of new cars are leased. Moreover, depreciation constitutes a large part of the annual cost of vehicle ownership. Leasing a car means the leasing company will have to manage the depreciation cost, not the lessee. However, there may come a time when you want to upgrade your vehicle or have to relocate to another city.
Your biggest concern will be whether you can end the lease term early. Yes, there are ways to do it, but some will be time-consuming and cost you money.
Let us explore the dynamics of leasing and the options of leaving a car lease early.
Why is Car Leasing a Viable Option?
An ad with an attractive lease deal grabs the attention of most potential car buyers looking for the cheapest way to drive a car. You make monthly payments, which is the drop in the value of the car during the lease instead of the whole value of the car. When the lease period ends, you return the car.
Car leasing has advantages that make it a viable option, such as lower up-front costs, reduced monthly payments, and no resale inconvenience. A car lease lasts 2 to 3 years on average, but you can get even longer terms. However, there is a limit to the miles you can drive and any modifications you wish to perform on the leased car.
Can You Trade a Lease Car Early?
The length of the lease is defined in the contract, but you can end the term early. You will most likely pay an early termination fee and other penalties. However, you need to read the lease contract and consult with the leasing company. Most leasing companies and dealers allow you to exchange your vehicle with a different model.
The important aspects to consider before moving to trade in a car lease are:
Residual Value of the Vehicle
This refers to the estimated value of the vehicle at the end of the lease. This amount includes the depreciation cost you will pay in the monthly payments. Therefore, it is essential to research the car’s estimated value before signing the lease agreement.
Equity
It is the difference between the vehicle’s value at the end of the lease and the payment still owed to the lending company or dealer. If the value of the vehicle is more than the amount owed, it is ‘positive equity.’ However, if the payment balance exceeds the current value of the car, it is ‘negative equity.’
Lease Buyout Options
Also called a ‘purchase option,’ a lease buyout allows you to buy or finance the leased car once the lease term ends. Many leasing companies and dealers offer this option, and you can continue driving the exact vehicle.
There are two options: an early lease buyout, where you can buy the car before the term ends, and a lease-end buyout, where you can buy the vehicle after the term ends. It is best to compare the car’s current value with the buyout price before making a decision.
Should You Trade in a Lease Car
The decision to trade in the leased car depends on the financial impact. If the car’s worth is less than the buyout price, then it is not a smart decision. Conversely, if the car’s value exceeds the buyout price, you can use the profit to purchase a new car. You need to weigh your options if you want to get out of a lease.
Here are some things to consider:
- Financial Implications
Trading the car will be costly if the residual amount is lower than the buyout option. It is better to wait for the lease term to end and weigh your options. You need to pay the early lease termination and also qualify for the credit score criteria.
- Change in Driving Needs
Sudden lifestyle changes cause drivers to change their mode of transport. If you want to grow your family, you can swap your current sports car or small sedan for a big SUV or a minivan.
- Market Conditions
The car market can sometimes be volatile, and the prices to sell or purchase keep fluctuating. If the price of a new vehicle is high, then upgrading or changing the vehicle may not be a suitable option.
- Condition of the Car
The make and model of the car are significant when you look to trade in the car lease. Some cars from notable brands usually retain their value for longer durations. However, it depends on the interior and exterior condition of the car.
4 Steps to Trade in a Leased Car
Trading the vehicle can be an intricate process. To ensure that it is smooth and efficient, follow the four steps below.
1 – Determine the Value of the Car
It is imperative to research your vehicle’s worth. Knowing its condition and value can help you negotiate a good offer for the trade-in. Certain useful websites allow you to determine the value of the car. You can even filter the search, look for cars similar to yours, and check their listing and previous sales prices.
2 – Calculate Your Budget
You need to access your finances and check whether the trade-in will result in a profit or loss. If the car’s value at the end of the lease is higher than the buyout price, you can earn a profit and use it to purchase a new car.
3 – Improve the Looks of the Car
A clean and maintained car will always fetch a good price when you look to trade in. Apart from cleaning the exterior and interior of the car, ensure there are no scratches and dents. Documenting the regular maintenance and service you have performed on the car is also essential.
4 – Find the Dealership
Search for a potential dealer that will allow you to exchange your car for another one. Book an appointment and proceed with the trade-in.
Why Opt for Lease Transfer Instead
A car lease trade-in is not always suitable as many variables must align with your interests. One option is to let the current lease end, and after you return the car, you can start a new lease. However, if you have to end the lease urgently, this option is not viable, and you must look for other solutions.
A lease transfer is the best option if you want to end the lease due to relocation, financial hardship, or simply have to upgrade the car. QuitALease makes it easy to post an ad for lease transfer and get potential offers instantly.
The biggest advantage is not having to pay the early termination fees, which is necessary in all other ways to end a lease. This method also does not impact your credit rating and allows you to purchase a new car lease without hassle.
The lease transfer process is called an ‘auto lease swap.’ In this process, the new lessee takes over your lease, follows the lease agreement, and resumes the monthly payments for the remaining lease term. With QuitALease, the lease transfer process takes about 1-2 weeks.
First, the new lessee will send a credit check application, which the leasing company will check. This will take one to two days. Next, after credit verification, the lease transfer documents will be prepared which takes three to five days. The process of mailing the documents, getting them signed, and the final handover of car keys takes another week.
Conclusion
Lease trade-in is a good option only if you profit from the exchange of your vehicle. The lease term ends after a particular period, and leaving it early results in hefty termination fees and other penalties. A lease transfer is by far the only option that allows you to leave your current lease and get another without incurring any additional cost.
Look no further; QuitALease is the best option for fulfilling a lease transfer without paying the lease termination fee and dropping your credit score. Register for the service, post a detailed ad for your car, and check messages for suitable offers.
Pick the buyer who fulfills the lease transfer criteria and initiate the process. The complete process of lease transfer with QuitALease takes not more than two weeks.