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Leasing a vehicle is still a popular way to finance a new car. According to Experian, nearly 30 percent of all new vehicles were leased rather than purchased during the fourth quarter of 2017. Leasing comes with some initial perks; you can often get a much nicer car than you could afford buying outright, and it’s a tempting option to trade in for a newer model every few years. But the payments and restrictions of a lease can quickly get old.
Whether you are sick of your current vehicle, or can’t afford your lease payments any longer, getting out of a car lease can be tricky. However, you do have a few options when it comes to freeing yourself from a car lease that is no longer meeting your needs. (See also: What You Need to Know Before Leasing a Car)
1. Transfer your lease
Easily the most convenient of your options, transferring your car lease is the most popular way out of it. Many dealerships will work with you to get you in a new car. They might buy out your old lease so you can open up a new one with them. If you stick with the same car manufacturer, you’re more likely to be able to transfer your lease to a new vehicle.
2. Swap your lease
Some auto manufacturers allow you to swap your lease with another individual. However, you should know that the lease transfer doesn’t necessarily remove you from being the responsible party. Should the person who takes over your lease stop making payments, you may still be on the hook for the missed payments. Make sure to carefully look over the terms and agreement before you finalize the transfer.
Additionally, you may be required to make some concessions that lowers the monthly payment for the person who takes over your lease. These payments are usually one-time and range from $500 to $5,000. To learn more, check out a lease swapping site like LeaseTrader or Swap A Lease.
3. Pay the penalty to return the car early
In nearly all auto leases, you have the option of being released from the contract if you pay a penalty fee. It can be expensive and paying the penalty isn’t ideal, but if you’re determined to get a new car or get out of the lease, paying it might be worthwhile.
Generally, you will need to pay some kind of termination fee in addition to the remaining depreciated value on the car. Keep in mind that the depreciated value can be a lot of money in the end.
4. Trade or sell the vehicle
Many people don’t realize that they can, in fact, buy the car out of their contract and sell it independently. This approach may be a far better option than paying a penalty to get out of the contract.
However, buying the car out of your contract can take a bit more elbow grease on your behalf. First you need to contact the leasing company — not the car dealership — and find out how much it costs to buy out your contract.
Once you have this number, you will have to pay an early termination fee. That fee can be in the neighborhood of $200 to $500 in addition to the buyout amount. The buyout amount will generally be less than current market value — but not always. You are more likely to come out ahead if you put a large down payment on your car at the onset of the lease.
Once you own the car, you are free to do whatever you like with it — include sell it. This is a great option if you’re sure you can sell the car easily. (See also: Should You Buy Your Leased Car?)
5. Contact the leasing company
If you experience a financial hardship and cannot afford your payments, you may want to consider contacting your leasing company directly.
Depending on your leasing company and your contract, you may be able to work out a temporary alternative payment plan. You could get a lower payment for a few months or even postpone your payments altogether. You’ll pay more in interest over time, but it can give you a little more breathing room in your budget while you get back on your feet.
Before you look into options for getting out of your car’s lease, it is important to review the terms of your contract so you understand exactly what your options are. Before falling behind on your payments or taking any drastic action, contact your leasing company directly to see what you can do with your car.
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