Getting Out of a Car Lease
Leasing a car is a great way to get lower monthly payments on brand new or late model cars. It is one way for people who are not mechanically inclined, or who love the new-car smell, to make sure they can have a new vehicle every few years. There is a price to pay for that privilege, however, and sometimes people leasing cars need to find creative and intelligent ways to extricate themselves from these leases.
People want to get out of car leases for a variety of reasons:
- Change in life circumstances
- Loss of a job
- Relocating to areas where cars are liabilities to own and manage
- Growing out of a car with expanding family circumstances
- Need a different type of vehicle for work
Regardless of the reason, getting out of a car lease can be difficult. For those who go about getting out of a car lease in the wrong way, the process can be complicated, disastrous to credit scores, and expensive.
The last thing you want to do to get out of a car lease is to stop making payments and go into default. That will leave a lasting black mark on your credit record, making it difficult for you to get financing for future vehicles, homes, and any other credit you may require for several years.
Financial hardships do happen, though, which makes it essential to understand and explore your options for getting out of a lease without going into default. Merely stopping payments and waiting for the dealership to repossess the vehicle is the worst thing you can do. Not only does it add repossession fees to the amount you owe, but it doesn’t absolve you of your debt to the dealership. According to your contract, you could still be on the hook for the remaining lease payments, early termination fees, and more.
Options for Getting Out of Car Leases
There are generally three options available to consumers looking to get out of a car lease. They include:
- Early termination of the lease
- Transferring the lease
- Buying out the lease
Each option offers its own set of pros and cons according to individual circumstances. Be aware, however, that the way depreciation works, automobiles depreciate at much faster rates earlier in the lease. That means that early termination may carry the risk of owning a substantial sum even when terminating the contract early.
Early termination of the lease can get you in hot water, depending on the language in the lease contract. If you are seeking to get out of the contract to “trade up” or into a different vehicle, it may be easier to do so, provided you pay the required early exit fees. In some cases, it is possible to trade down and only pay exit fees, saving you more money over time. One thing to consider is that there are “lease swapping” sites where people will list leases available to those interested in taking them over. Some people like the lower monthly payments that leasing delivers over buying, and these sites allow you to find willing individuals that might be interested in helping you find relief from your current contract.
Transferring the lease allows you to find someone interested in taking over the contract. Of course, the other person in question must meet the rigorous credit requirements many dealerships require for leasing vehicles. However, it gives you another option to consider. The problem, or consideration, with this method, is that it is not always easy to find someone willing to take over a lease. It is much easier to find buyers for vehicles than people interested in taking over a lease. However, it does remain a viable option if you do have an interested party in mind.
Buying out the lease is another consideration. This option would have you buy the vehicle outright. The benefit of this option is that you now own the car and can do anything you want with it. You can sell it, give it to a family member, or trade it in for another vehicle you wish to purchase. Additionally, you could drive it around without paying a monthly note.
Looking for ways to get out from under a car lease that no longer benefits your situation? You do have options, including trading up, buyouts, early termination, and lease transfers. The one thing you don’t want to do is risk default by taking no action to relieve yourself from your lease burden.