Car leases are a tempting proposition; you get to drive a brand-new car for a low monthly payment, with little to no money down, and in the end, you can walk away from it, keep it, or trade it in for something newer. That all sounds great, but what if you end up no longer being able to afford the payments or otherwise need to get out of the lease early? Here are a few ways in which to do so.
Transfer the lease
One of the easiest, if not the easiest, ways to get out of your lease is to transfer it over to someone else that’s willing to take over the payments. If you know someone that likes your car and can afford the monthly payments that you’re making, then most leasing companies will allow you to transfer it.
Just note that there is typically a fee associated with transferring and the new lease will only have the car for the remainder of the lease term. Unless they plan to buy it after. A great website to use in finding someone to transfer your lease to is Swap A Lease.
Sell or trade the car
Although the car is leased, you can actually sell or trade the car in. First, find out what the payoff amount is for the car by calling the leasing company, not the dealership. For example, if you leased a Honda, then call Honda Financial Services, as they are the ones that actually leased you the car.
When you get the payoff amount, it will likely include the rest of the payments that you owe plus any early termination fees. Just note that unless you put a huge down payment, the car will likely be worth less than what you owe, so be prepared to incur an extra cost.
If you sell the car to a third party, then you may have to pay taxes, however, if you end up trading the car into a dealership, then you might not have to do so. Either way, be sure to get the payoff amount first.
Return the car
Like a rental car, you can actually return the car to the dealership, however, you will still be responsible for the remaining payments plus any early termination fees. Also note that if you trade it in, then the dealer may give you the lower trade-in value for the car as opposed to selling it yourself and getting the “private party” value, which is usually a higher amount.
Ask for help
Most leasing companies, especially during these current times, will be willing to work with you if you let them know that you’re in financial distress. They might be able to help you out by lowering the monthly payment or even suspending the payments. Just remember that if they delay payments, then you’ll be prolonging the lease term and will have to make up for it later on.
Default on the lease
We really DO NOT recommend this route. However, we can understand that life happens and if you want to go the extreme route and just stop making the lease payments altogether, then you have to do what you have to do. Just don’t be surprised if the car ends up getting repossessed. As Steven Wright once said, “If you think nobody cares about you, try missing a couple of payments.”
Explore your options
These are five ways that you can get out of a car lease if you really need to. Having a car lease is actually a lot like having a traditional car loan in that if you need to get out early, you’ll still have a price to pay. However, if you want to give yourself a little insurance next time you lease a car, then put a bigger down payment.