Everyone loves to own and drive a new set of wheels. However, most cannot afford to pay cash upfront. Leasing a car is a fantastic alternative as you rent the car for only a limited time.
The average car lease payment is $563, an increase from the last two years. However, with a good credit score, you get the ease of lower down payment, lower monthly installments, and no resale hassle. You must also analyze your financial position to decide if you want a short or long-term lease.
Leasing can avoid all the hassles of buying or financing a car. However, it does have some drawbacks, particularly when you want to leave the lease before your contract ends.
The Reasons to End Your Lease Contract
Terminating a car lease results in fines, fees, penalties, and a lot of stress, which you will want to avoid. Even experts recommend avoiding closing the lease early due to the hassles and penalties you will face. But, there are times and unexpected situations when you have no other option than to break the lease. Some of those reasons are
- You have relocated to another city and do not need a car
- Making monthly payments is difficult due to financial constraints
- The leased car no longer fulfills your requirements or needs
- You have lost your job and cannot afford the lease payment
There are many factors and options to consider when exiting a lease, whether you want to reduce the payment or stop paying the car lease altogether.
Depending on the physical or financial reason, leasing companies offer a grace period. You can talk about your financial hardship and ask them to reduce the monthly payments or suspend the payments temporarily. You will eventually pay the full amount that is due, but having some grace time can help you manage your financial situation.
Penalties for Closing the Lease Early
Leasing companies and dealers mostly charge penalties for individuals who terminate the lease contract early. The more time left in the contract, the more you have to pay a big penalty. Usually, the amount is calculated on the current market value of the car and the remaining time of the lease.
The penalties and any additional cost of terminating a car lease vary from one company to another. You need to read the lease contract to know about the specific details. In general, these may include:
- Making the remaining monthly payments of the lease
- An early termination fee
- If you have driven the car more miles than the mentioned estimate in the lease deal
- Repair fees if the car is badly damaged or shows extensive wear and tear
- Negative equity between the lease amount and the current market price of the vehicle
- A disposition fee, which is the cost of cleaning and preparing the car for resale
Reading the contract terms on early termination is necessary. However, you also need to talk with the leasing company or dealer to determine the total amount and any additional fees you have to pay.
The Best Ways to Get out of Car Lease
There are ways to get out of a lease before your contract ends. However, some options can be more expensive and stressful than others. It is better to read through your contract and know about the penalties you will be liable for if you want to end the contract.
Let us explore the ways to get out of a car lease.
Early Lease Termination
You can easily terminate the car lease before the contract ends. The lessor (the party who leased the car to you) will calculate the amount associated with your early termination. You will have to pay a termination fee, which is the difference between the amount you owe and the estimated value of the car at the end of the lease. This is also called the residual value.
Additional charges may apply, such as the cost of disposing or transferring the vehicle. Breaking the lease quite early in the contract period means you have to make hefty payments.
Remember that a car’s value depreciates with time. So, if you end the lease later in the contract period, the lease termination fee will not be that costly.
So if you terminate the lease early in the contract period, the amount you pay is quite high. But if you quit the lease at a later stage, the amount or lease termination fee will be less.
Lease Buyout
Almost all lease contracts include the option of purchasing the car when the lease term ends. This is called a lease buyout, and you can keep the car you are driving or sell it yourself later.
Waiting for the contract to end gives you a more favorable deal to buy the vehicle, but you can also end the contract ahead of time and make a lease buyout. However, you may also have to pay additional fees.
Researching and determining the car’s value before discussing a buyout with the leasing company or dealer is better. Next, check your lease agreement to see what amount you must pay and whether the car is worth it.
To make the purchase, you may also have to opt for a car loan; even the leasing company may offer to finance the deal. However, research and compare the loan rates and conditions from different lenders.
Lease Trade-in
In some lease contracts, the company or dealer allows you to exchange your existing car for a different model. While this option may attract you, you have to pay the early termination fees and meet specific credit score requirements to move forward with the lease trade-in.
If the residual value is less than the car’s current market price, you will get a profit. Conversely, if the residual value is more than the current market price of the car, then you have to pay the difference or accumulate the cost in a new lease or loan.
Lease Transfer
One of the best options is to transfer your remaining lease payments to another lessee or potential car buyer. This process is also known as lease takeover, and you can end the lease without paying any termination fees.
You need to first confirm with the leasing company or dealer if a lease transfer is allowed and then search for a potential lessee. Physically searching for a lessee can be exhausting and take considerable time. The suitable option is to seek help from online platforms. QuitALease offers a fast and convenient way to exit a car lease.
It is an online marketplace connecting people wanting to close a lease with those who want to buy a car lease.
You only need to sign up at QuitALease, post the ad, and then connect with a possible person willing for a lease takeover. Once you find a lessee, you can quickly transfer your car and get out of the lease.
The process involves the leasing company checking the new lessee’s credit and preparing the lease transfer documents. After signing the papers, you hand over the car keys to the new buyer. QuitALease can help you save considerable time and effort and the hefty penalty and additional fees of terminating the car lease.
Conclusion
Once your lease term ends, the vehicle is returned to the leasing company or dealer. However, you may have to close the lease earlier than scheduled due to personal or financial reasons. Early termination is the most expensive way to get out of a lease, as you will likely pay a higher cost. A lease buyout is an option, but to finance the purchase, you will have to get a loan.
A lease trade-in is another way, but there is no guarantee that you will get a profit, and you have to pay early termination fees. Transferring the lease is the safest option, as you may give up the car and lease without paying hefty penalties or additional charges.
QuitALease is the best marketplace that offers a seamless lease takeover process. Simply register on the website, find a potential lessee within minutes, and begin the lease transfer process.