Are you planning to break the car lease early? While this is possible, the biggest downside is you have to pay for the early termination fees including the lease balance that comes with the lease contract.
The lease transfer fee will depend on the remaining payments of the lease terms, the overall cost of the lease, and other associated fees that you signed in the lease agreement.
What are the other fees you need to pay when you decide to break your car lease early?
Aside from the lease termination fee, you’ll have to pay the processing, document, and key return charges. You are also responsible for any wear and tear beyond the normal use of the vehicle. If there is any damage, you will have to pay for it as well.
With that being said, what are your other options if you want to end the leased car contract earlier than the agreed date? There are several ways you can break out of a car lease early without paying too many penalties.
In a nutshell, early termination of the lease agreement is not the best move if you consider the substantial amount you’ll have to pay.
However, there are alternatives to make lease termination work in your favor. So, are you ready to learn how to terminate your lease early and hassle-free? Let’s dive in!
How To Break Out Of The Lease Early
Whether you want to lease a new car or you’re in financial trouble, terminating the leased car contract early is a big step. Why? That’s because this could affect your current financial situation. For this reason, terminating your leased car early is the fastest way to get out of a lease agreement and be free from the monthly payments.
In perspective, early lease termination comes with a hefty price and it isn’t the best way if you don’t want to compromise your finances. However, there are cheaper ways you can break out of the leased car early without paying too much money.
We know that a leased vehicle is a long-term car rental, and just like most lease contracts, there are rules and regulations you have to follow. So before you sign the lease agreement, make sure you’re ready for the long-term commitment.
So, without further ado, here are several ways you can break out of a lease agreement without breaking the bank.
This is the most common and the most expensive way to get out of a lease early. In most cases, car leasing companies allow early termination of the lease. However, you should be aware that this choice comes with a hefty fee.
A leasing company would probably charge you for the entire amount of the lease, plus any other fees associated with the contract.
To make sure that you’re making the right decision, it’s best to contact your leasing company and ask about the early termination fee. This way, you’ll know how much money you need to pay to if you break out of the lease agreement.
While the amount will depend on different conditions, in general, it would be about 50% of the remaining lease payments. As I mentioned earlier, you’ll be liable for any wear and tear that exceeds the allotted amount in the contract.
So, if you’re planning to return the car in bad shape, then this is not the best choice for you.
Another way to get out of a lease early is to transfer the lease to another person. This is the perfect way to break out of a car lease early without losing money. Likewise, this works best if you need to move to a different state or country for work.
The good thing about lease transfers is that you won’t be charged an early termination fee. However, there are other things you need to consider before you can transfer the lease to another person.
For instance, the new lessee has to meet the requirements set by the car leasing company. Likewise, you’ll still be liable for the lease payments until the end of the lease.
So, if the new lessee fails to make a payment, you’ll be held responsible even after you transfer your lease.
This is why you must screen the person carefully that they’re financially capable of the lease payment before transferring the lease.
Car leases need insurance, and you need to make sure that the new lessee has an active insurance policy. Otherwise, the car leasing company can void the transfer and hold you liable for the remaining payments.
Lastly, a lease transfer is only possible if the car leasing company allows it. So, before anything else, you need to ask the company if they’re open to the idea of transferring the lease agreement.
Another way to get out of a lease early is through a lease buyout. This means that you’ll have to pay the remaining balance of the lease contract in one lump sum.
The good thing about an early buyout is that you’ll own the car outright once the buyout is complete.
However, the buyout amount can be quite expensive depending on the terms of the lease. But if you want to be free from the monthly payment, you’ll have to become the car buyer and make a lump-sum payment.
The best time to do a lease buyout is during the last six months of the contract. By then, you would’ve already paid most of the car’s value, and the buyout amount won’t be as expensive.
Furthermore, you can also negotiate with the car dealership and ask for a lower buyout price. They might be open to the idea since it means that they can sell the car again at a higher price.
But please be reminded that a lease buyout is only possible if the car dealership agrees to it. So, you need to talk to them first before anything else. If you’re planning to buy a new car after the lease, this might not be the best option for you.
Roll your monthly payments into a new car lease
If you’re not ready to get out of your current lease agreement but you want a new car, then you can always roll your monthly payments into a new lease.
This way, you can return your leased car and get a new lease without having to pay any early termination fees. Likewise, you won’t have to worry about the wear and tear fees. If you’re planning on getting a new model anyway, this might be the best option for you.
Leasing companies offer flexible terms, and you can always negotiate for a better deal. But please be reminded that you’re still bound by the terms of your current lease agreement.
Of course, you need to make sure that the new car lease you’re getting is better than your current one. Otherwise, it’s not worth it. You also need to have a good credit score so that you can qualify for a lease on a new model.
However, you should be aware that this will extend your lease agreement. A car lease is typically for 24 or 36 months. But if you choose to roll over your car lease payments, you might be stuck with the car for another 2 to 3 years.
So, if you’re planning for a new car purchase after your lease, this might not be the best option for you.
Talk to your car leasing company
If you want to get out of your lease early, the best thing you can do is talk to your car leasing company. They might be open to the idea to terminate your lease and offer you a way out without any penalties.
For instance, they can allow you to return the car and get a new lease. Or, they can offer to buy the car from you at a reduced price.
The key here is to communicate with your car leasing company and explain your situation. They might be more understanding than you think and offer you a way out.
Please note that every car leasing company has different policies. So, you need to talk to them directly to see what your options are.
What’s the best time to get out of a car lease early?
The best time to get out of a car lease early is when the value of the car is higher than the remaining balance on the lease. This way, you can sell the leased car and use the money to pay off the balance.
Moreover, you won’t be charged any early termination fee if you do this. However, you have to keep in mind that the value of the car depreciates over time.
So, if you’re planning to get out of the lease early, make sure to do it at the right time.
The worst time to break out of a car lease
On the other hand, the worst time to break out of a car lease early is when the residual value of the vehicle is lower than the remaining balance on the lease. This means that you’ll have to pay the difference out of your pocket.
Furthermore, you’ll be charged an early termination fee if you do this. So, if you’re planning to get out of a lease early, make sure to do it at the right time. The market value of any vehicle can change rapidly, so you need to be careful.
If you’re not sure when the best time is, you can always talk to a professional. They can help you figure out the best time to get out of your lease agreement.
Before you sign any lease contract, make sure you know the vehicle’s current value and its wholesale value to avoid any unnecessary fees. Other costs to keep in mind are the early termination fee and the security deposit. You should also have a clear understanding of the terms and conditions of the agreement and most especially the vehicle’s residual value.
What happens when disability or death occurs during the lease term?
If you or the lessee dies during the lease term, the contract will be terminated. The same goes for if the lessee becomes disabled and can no longer drive. In both cases, you’ll need to bring the car back to the lease company.
Keep in mind that you might be charged an early termination fee if you do this. So, make sure to read the lease contracts carefully before signing anything.
What if I want to get out of my lease early but the dealership won’t let me?
If the dealership won’t let you out of your lease early, then your only option is to wait until the contract expires. Once it does, you can return the car and be done with it.
Keep in mind that you might be charged a wear and tear fee if the car is in bad condition. So, make sure to take good care of it if you want to avoid this fee.
If you find yourself in a situation where leasing a car is no longer feasible, then don’t worry. There are ways you can get out of the lease early without breaking the bank.
Just remember to consider all your options carefully before making a decision.
And always keep in mind that the best time to get out of a car lease is when the value of the car is higher than the remaining balance on the lease. Breaking a car lease early is possible but it comes with a price.
So, if you’re planning to do this, make sure that you understand the consequences first. Weigh your options carefully and choose the one that’s best for your situation.
There you have it! Those are some of the things you need to know about breaking a car lease early. Just remember to do it at the right time and you’ll be fine.
If you have any questions, feel free to ask us in the comments section below. We’ll be more than happy to help you out.