How to Get Out of Your Car Lease Early
Leasing a car may sound like a great idea. You get to drive a new car for a low monthly payment and trade it in after two or three years. However, one of the biggest drawbacks to a car lease is that it can be pretty hard to get out of one. And if you lose your job or the car no longer meets your needs, you may need to do just that. Here’s how to get out of your car lease early.
Transfer Your Lease
You may have the option to transfer your lease to another party. You’ll need to check if it’s permitted in your lease and legal to do so in your state. The person you’re transferring the lease to may have to meet the credit requirements of your lessor, and you’ll want to check the fees involved to confirm whether it’s actually less expensive to transfer than to early exit from the lease. There are websites that can connect you with people interested in taking over the lease, such as leasetrader.com. Find out whether the buyer takes full financial liability once the lease is transferred and whether you are still responsible if they miss payments.
Purchase the Vehicle
Purchasing the vehicle may make sense if the cost to pay it off is less than the resale value of the vehicle. The leasing company has a payoff schedule that shows you how much it would cost you to buy the vehicle. You’ll face an early termination fee, but it still may pay to get out of the lease and sell the vehicle to another party. Many lenders who offer auto financing also offer lease buyout loans.
Early Lease Termination
Your lease should disclose details on what is required to terminate your lease. This releases you from making payments, but you’ll have to pay an early termination fee and possibly depreciation and other costs such as taxes and transfer fees. You may have the option to trade the vehicle for a different vehicle. You’ll probably still owe early exit fees, but it’s possible you can trade it for a vehicle that has a lower monthly payment.
Terminating Your Lease and Your Credit
Making all your lease payments on time is important to protect your credit. If you miss any payments, it can hurt your credit score. If you decide to terminate a lease, do exactly what it says in the lease agreement. If you default on the lease, the vehicle may be repossessed, which will have a negative impact on your credit.
Protecting Your Credit
It’s important to be proactive about protecting your credit by paying all of your bills on time and by not borrowing more than you can afford to pay back. Check your credit reports at least once a year to make sure there are not any errors.
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