Sometimes you may find yourself in a situation when a car lease might no longer work for you. Maybe your current car doesn’t fit your needs anymore, you feel like driving a newer model or you are having trouble making payments. So it’s probably high time for your early end of the lease.
For sure you don’t want to make your credit score drop, yet you may be considering terminating your car lease early. So what to do and how to avoid losing money in this situation?
Let’s see what are the regulations and ways of dealing with them.
According to DMV.org, penalties for early car lease termination may include:
- Remaining payments on your lease
- An early termination fee
- Costs related to preparing the vehicle for sale
- Storage and/or transportation of the vehicle
- Taxes associated with leasing, if any
- Negative equity between your lease amount and the current value of your car
Fortunately, early termination isn’t your only way, and it’s better to consider other options.
Ask your leasing company for help
When dealing with financial operations it’s always better to be transparent and not to play with a system. If you’re in financial trouble, but you feel that you can get back on your feet if given a few months, before you terminate your lease early it’s worth contacting the leasing company to see if they will offer payment relief for a few months.
In this case, it’s up to the company whether to meet your needs and try to help you out. They may agree to lower your monthly payment or even temporarily suspend it.
Most probably you will have to make up the difference later on but you will maintain good relations with your company, show liability, and avoid extra penalties. Tired of reading? Get in touch with our lease experts to get a Free Consultation on any issue you may face.
Take everything in your own hands
If you consider coping with it on your own, you can analyze the market and end your lease in a few different ways. Before you go ahead with all the tips and tricks to get away with a penalty it would be a great idea to check your lease and carefully study it, to see which of these penalties are included and collect the following information:
- Your monthly payment cost
- Number of months are remaining in the lease
- The amount of additional lease-end fees
- The residual value — the cost to buy out your vehicle at the end of the lease
The total of lease-end fees and remaining monthly payments is a good estimate of what you would have to pay to terminate your lease early and get rid of your leased car. Now when you have the approximate number, let’s consider 3 ways to end your car lease earlier.
1.Return the car and pay it off
Yes, it’s the easiest and perhaps the most expensive way. Your lessor will handle all of the details for you. Instead, you will have to pay the early termination fee, as well as the remaining depreciation of the vehicle.
After that, the lessor will sell the car at wholesale auction and reduce your payout by this “realized value”. This value is the lowest amount you could possibly get for the vehicle.
It’s hard to name this way the money-saving one and if you’re desperate to get out of the lease, it’s probably due to financial reasons. Let’s see other options to try to save as much money as possible.
2.Do away with your leased car
You may sell your car to a dealer of your car’s brand. You’ll get your best price from a dealership selling the same brand of car you’re looking to unload. Pickups and SUVs are in high demand now and might be more profitable to sell. The value and desirability of sedans and other vehicle types will depend on the popularity and availability of those brands.
The main benefit with the dealer is that they will take care of the purchase from the leasing company and you won’t have to worry about the tax issue. Although if the residual value of your car was low and your payments high, you might still be on the hook for a lot of money.
You may choose to transfer your lease. Transferring is a good idea to end your car lease if it is legal according to your state laws and permitted under your lease contract. Most leasing companies allow you to transfer the lease to another person if his or her credit report is eligible for this. Keep in mind that in some cases you will still technically be on the contract and liable if that other person stops making payments.
You should carefully look for a trusted party you’re transferring the lease to who meets your lender’s credit requirements. You will also have to pay a transfer fee which can range between $50 and $500. For each particular case, it is better to double-check and investigate to see if it’s cheaper than early termination.
3.Buy your car out
When you buy your car, you actually get equity in your vehicle and from now on you can do whatever you want with your auto. You can purchase the car if you would like to keep it and most likely you will need a lease buyout loan as well. The downside is that you would be extending your financial commitment to lower your payments.
Another way you may buy your car is to then sell it. It is quite a tricky way and it’s better to be well-equipped with the knowledge of the market fluctuations and the real current value of your vehicle. You can do this through websites such as Kelly Blue Book or Edmunds.com.
This way you can either purchase the car with ready cash or take out a loan to cover the expense. Selling your car to a private party will bring a higher price than the trade-in or purchase figure from a dealer. However, it will require time and some money for advertising to find a buyer
Bottom line
You really can end your car lease earlier than agreed though it’s almost never the way to save money. You either will have to deal with a lessor and pay some termination fees or have some hassle about buying and selling it and trying not to lose much at once.
Of course, you may get a bargain and even win some additional money though it should be considered as luck. If you are not sure and have some questions you can always rely on us to help you with them. Contact us to have advice on your case!
#enjoy your freedom with Grand Prix Motors!
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