When it comes to car leases, there are a few options available to consumers who want to get out of their agreements before the maturity date. In this article, we’ll discuss three of those options in detail: early lease termination, lease transfer, and lease buyouts.
Of course, each option comes with its benefits and drawbacks. However, it’s important to understand each option to determine what makes the best financial sense for you.
- Early Lease Termination
If you want to exit your car lease agreement before the maturity date, one option is early lease termination.
Most car leasing companies allow you to terminate their car leases early, but it’ll come with a cost. In general, when a car is returned early, it creates a shortfall for the car leasing company, so they will usually charge consumers an early termination fee to make up for that loss.
The costs of terminating a lease before maturity can vary depending on whether you’ve leased from a bank or a third-party financial institution . Typically car leasing companies will charge an early termination fee that is equivalent to a set number of car lease payments. For example, if you want to terminate your car lease four months before the maturity date, some car leasing companies may charge you for four car lease payments on top of an early termination fee.
It’s important when signing into a lease agreement to know what early termination fees are included. Compare the terms from each of the lenders as well. Each will have their own terms and costs for ending a car lease agreement early.
- Lease Transfer
Another option available to car lessees who want to terminate their agreement is a lease transfer.
This option allows consumers to get out of their car leases without having to pay for an early termination fee and without paying residual value at the maturity date. However, there are a few things you should know before transferring a lease.
First, car lease transfers can be complicated and it is important to understand the process before trying to execute one.
There are online websites and services that offer car lease transfers, but not all of them are legitimate. If you decide to use an online service to transfer your car lease, make sure that the car leasing company is reputable and/or associated with the Better Business Bureau.
Second, it’s often the case where you can structure your transfer to get some or all of your residual value back. Residual value refers to the value of your car when it returns at maturity date (i.e., after three or even five years). When car leasing companies calculate car value, they generally use the car’s book value and then depreciate it over a three-year period. Since car values are largely based on supply and demand, actual car values can be different from that predicted by book value.
For example, if you have a car lease with a residual value of $15,000 and the car is currently worth $20,000 on the market, you can negotiate a car lease transfer with the car leasing company in which you receive $15,000 from them. This option is not available to everyone, but it is worth exploring if you want to get out of your car lease without paying an early termination fee.
- Lease Buyouts
Buying out your lease might cost less as you’ve already paid for the vehicle during the highest period of depreciation—also known as calculating your used car’s residual value. Buying out your lease isn’t always the easiest decision and really depends on the state of your car, odometer reading and your lease contract.
Dealerships and online platforms like ours give the option to buyout your lease early.
In order to do this, you have the pay the residual value remaining on your vehicle as well as what’s outstanding on the lease and applicable taxes. Just a note that you'll have to work with your dealership and financial institutions to close out your lease or lien first.
If you're leasing your car and looking to get out of it it’s important to understand the P’s and Q’s behind your agreement if you haven’t reviewed them already. If you’re looking to get out of your lease and have questions you can also talk to one of our Autozen experts who can help answer any questions.
Looking to sell your car online but have an existing lease?
Our super-smart and friendly team can help you learn more about ending a lease early. We’ll also work with you to help determine the cost of ending your lease and the best way to go about it so that you’re paying less.
Get in touch with our customer service team at +1-877-492-1453 or via email at email@example.com.