How to Terminate
Your Car Lease/Loan Early
We all know what a great feeling it is to buy or lease a new
car, right? Nothing better than that, especially when it
still has that ever-popular, ‘new-car-smell’
that you just can’t get enough of, right? Furthermore,
you know you’re not going to have any mechanical problems for quite a while, it
looks great, has great gas mileage, it’s affordable, it’s what you wanted, and
most of all, your neighbors are jealous!
So let’s ask the question most people who just bought or leased a new
car doesn't want to consider – What happens when the ‘new-car-smell’ wears off, the neighbors are no longer jealous, and
you suddenly believe that perhaps this wasn't the best deal or car for you; how
do you get out of the lease/loan early when you’re already a year or two into
According to “Walkaway Canada”, a
Canadian auto leasing franchise, there are a few primary reasons people decide
to get out of their auto lease or loan early.
Loss – A person may be terminated or indefinitely laid off from their
employer which will result in an inability to meet the financial responsibility
of the auto lease/loan.
– A person may become stricken with a physical disability, presumably, the
result of an unfortunate auto or sports accident or injury.
License Issues – Traffic tickets and excessive points against a
person’s driving record can result in a revoked or suspended driver’s license.
Regardless of your reason for choosing to terminate your
auto lease early, you should always know your options, as well as the specific
terms and conditions of your particular agreement. Knowing and having this information will only
assist you in successfully terminating your lease early.
Once you've made the decision to end your auto lease early,
you have to understand what that entails which is everything from preparing the
car for return to the dealership to paying costly penalties and fees. Most auto industry professionals and leasing
experts will not hesitate to confess that auto leases weren't designed to be
broken. Nonetheless, many have also gone on record to state that almost any
auto lease can be broken or terminated early—you just have to know your options
and the correct way to have a successful and early termination.
Preparing the Vehicle
Preparing the car for return will more than likely be the
simplest, less expensive part of the early lease termination process. This includes washing and detailing the car,
ensuring all the routine maintenance has been properly taken care of is up to
date. Be sure to take photos of the
vehicle after it has been detailed and be sure to take photos of the odometer,
engine, and tire tread. You want the car
to look as good as it did when you first leased it.
Early Lease-Ending Options
There are several basic and most-common options for
terminating your lease early which includes; returning the vehicle to the
dealer, trade-in, payment take over, selling the vehicle, or buying the vehicle
from the leasing company.
to Dealer – Usually involves penalties and most expensive option. Some
creditors view this as defaulting on a financial loan/responsibility and it can
potentially have a negative effect on your credit report.
– Lease new car from same dealer. Also expensive. Original penalties rollover
into new lease which causes higher payments new lease/contract.
Takeover – Find someone to take over your lease and payments. This option can potentially backfire if the
new party defaults on their obligation, the leasing company can hold you
From Leasing Co. – Every lease has a ‘buyout’/’payout’ option.
The positive of this option is that it can be done at any point during
the lease. The drawback is; in many
cases, current market trends are a factor, and you may pay more than the car’s
Car – Use your payoff amount as price to sell car to a private owner. This is an overall good option. By selling the car, you avoid penalties/fees,
and it’s a less expensive option, however, the higher your payoff is, the
harder it is to find a buyer.
As with any contract-binding agreement that requires a
financial obligation, it’s always a good practice to do a little research prior
to beginning into an agreement – this is no different for ending your auto
lease early. It’s in your best interest
to know what you’re getting into and to know what to expect throughout the
process beforehand, so don’t be afraid to ask questions—not doing so could leave
you with the short end of things.