Published on July 9th, 2019 | by Sunit Nandi0
How to Wiggle Your Way Out of a Car Lease Without Spending Too Much?
If you really think about it, signing a car lease is pretty much like a marriage contract. But what if you want out? There are plenty of reasons as to why someone would want to get out of a car lease. Here are a few of them:
- You have fallen in love with another car.
- You have a family now so, your needs for a vehicle have changed.
- You are moving to a new city
- Your financial situation has finally gotten better, and you want to get that car you have always wanted.
- The annual is exceeding or exceeded the restriction
No matter what the reason is, you would have to face some penalties for early termination of your car lease. It is possible that your car dealer might try to convince you to trade in your leased car in place of a new one. But even then, it will come with its own penalties.
So, does that imply that there is no way out? Not at all. There are ways you could wiggle out of a car lease. Read on to find them out:
You can purchase the car
Whether you should purchase a car during the lease or when it ends, largely depends on the price the car dealer offers you. If the market value of the vehicle is higher than its pay-off price, then it might be a good option to buy the car.
But if the dealer is asking you to pay a higher amount when the car doesn’t have a good market value, it is not worth it.
You can return the car
This is the simplest option you could use to get out of a car lease. But, at the same time, it is the most expensive one. The reason it is a simple way because you don’t have to bother about the details because the leasing company and dealer are going to do it on your behalf. But it tends to be a costly alternative because the penalty provisions of the lease agreement will apply.
Another option could be of returning the car to the dealer. Now, remember, this should be your last option. Why? Because the penalties of this alternative along with the early termination fee of the lease, are almost the same. So it would be better to stick to the lease agreement. If you still have to pay for the vehicle, you should better keep it.
You can transfer your lease
The cheapest way to get out of a car lease is by transferring it to someone else. This procedure is also known as lease trading, lease transfer, and lease assumption. It is not only affordable but doesn’t impact your credit in any way either.
What happens in a car lease is that the person who buys the lease (buyer) takes over the payments of the leased car. With the approval of the leasing company, of course. Also, if the terms of the lease agreement allow it, and it is legal in the state you reside.
This way, he gets all the rights and responsibilities of the original lease agreement.
The new owner (buyer) is responsible for making all of the future payments of the lease. And you, the seller of the lease can walk away without having to pay any financial penalties. Sounds cool, right? Sellers just list their cars, and then interested buyers reach out to them, and the transfer of lease takes place from one person to another.
Why would someone want your car’s lease?
Now, you might wonder why someone would be interested in your car lease. It is possible that they want to have a car for a short time period and they don’t want to get into the technicalities of a new car lease agreement. There could be a few other reasons as well:
- The buyer of the car lease has the intention of buying the car when the lease term ends.
- The buyer likes to test and drive a new vehicle each year, so he finds car lease swapping the best alternative.
- Some people do not have the financial stability to pay heavy down payments.
How does it work?
Here is how the car lease transfer process actually works:
- First of all, the person who wants to take over the car lease submits a credit application to the leasing company.
- The leasing company then carries out a background check and the credit score of the applicant.
- The company gets the lease transfer documents ready after approving the application. Both the buyer and seller have to thoroughly go over these before signing them. The documents are then submitted to the leasing company.
- After the paperwork mentioned above, the buyer of the car lease gets the keys of the vehicle. After the processing is complete, the new buyer would pay the monthly installments.
Cost of the Car Lease Transfer
For the lease transfer, you have to pay a fee. The good news is that the person who takes over the lease is the one who has to bear most of the cost. Also, apart from the fee, the cost of lease transfer tends to be less than the early termination of the lease.
You might have to pay some of the following penalties to get out of a car lease earlier:
- Fees for early termination of the lease
- Payment of any taxes associated with the lease (if any)
- The remaining payments on the car lease
- Any of the costs related to selling of the car
- Transportation or storage cost for the car
- Negative equity between your vehicle’s present value and the lease amount
Consideration for lease transfer
There are the legalities involved in transferring the car lease. So, it is critical that you make yourself familiar with them the main terms of a lease transfer, such as the buyer’s credit score and whether the leasing company allow car lease transfer, etc.
You can also transfer the car lease to someone living in another state, but you would have to check it with the leasing company first. There are a few leasing companies that do not allow car lease transfers or require the seller for some liability before the transfer of the vehicle takes place. So instead of facing any kind of problems, later on, it is better that you first do some research on your own and know what does the existing lease contract allows you. So, have a good look at the contract before you sign a new lease.
The Bottom Line
It is not simple to get out of a car lease earlier than the agreement. If you are lucky enough, you could find someone to take over your car lease for the remaining payments of the car lease. Or you would end up paying a hefty penalty for early termination of the car lease. So, your best bet to avoid penalties is transferring your call lease to someone. You could find an individual buyer yourself or use a car lease transfer platform like Quitalease.com.
Online car lease transfers have greatly increased in numbers due to such companies. It also removes the nuisance of hopping from one dealer to the other for finding the right car. Also, you could find a used car lease and drive the car of your dream at a low price. Simply go to the site, choose the car, and negotiate the deal.