Leasing a car is a perfect option for those who do not want to pay the full price of a new car upfront. If you’re intimidated by large payments at the beginning, then a lease could be the right choice for you.
There are some definite advantages of a lease: you pay less than you would on a new car, and it’s inexpensive to get in and out of the arrangement without damaging your credit.
On the other hand, there are times when a lease might not work in your favor. If you lose your job, face challenges in meeting your payments, or if the car isn’t suitable for your needs anymore, it may be time to reconsider.
While you might want to break your car lease prematurely, doing so could be costly. Fortunately, premature termination isn’t your only way out.
How to Break Your Car Lease Early
Here are four ways to get out of your car lease early without incurring penalties.
1) Sell Your Car to a Dealer
Before approaching the dealership to return your leased car, it’s advisable to find out its value. If your car has good value, selling it to a dealer may be the cheapest option to get out of your lease.
In fact, many lease owners are finding that now is a good time to use this option. The current value of used cars has risen due to a scarcity of used vehicles caused by the COVID-19 pandemic. Dealers are now prepared to spend more money to obtain units to meet the demand for used cars. So, there might be better value than expected on your almost-expiring lease.
It isn’t a given that this market trend will last for long, so you should look into this option soon if you are considering it. However, depending on your vehicle, you could still end up owing lots of money if you go with this option. So, you may want to consider some alternatives.
2) Swap Your Lease
Swapping your lease allows you to transfer your lease to another individual with whom you have an agreement. Often, all the lease company wants is compensation for what is due. They are willing to accept this payment from someone else.
However, this is not always the case. Some lease agreements require you to be in the pact until it expires. So, ensure that a lease transfer is acceptable in your lease agreement terms before pursuing this option.
Why would anyone want to take up your lease? Most purchasers want short-period leases at affordable prices. So, if you have an attractive lease that just isn’t working for you, someone else may be happy to take it off your hands.
Note that even if you transfer your lease, you generally remain accountable for any costs such as damage when the lease expires. You should carefully review your lease agreement before considering a lease swap.
3) Buy Your Car, Sell It Yourself
Depending on your situation and lease, you may be lucky enough to end your car lease with negligible fines. If the leasing company agrees, you can purchase your car and dispose of it yourself. Although you will not be acquiring it at the market price, it is a lot cheaper than paying heavy penalties.
To explore this option, ask for the buyout sum from the leasing company. Ensure you receive it in writing—either as a hard copy or via email. You should then look up your car’s market value. If the difference is less than the lease termination penalties, then go for it!
4) Buy Your Car and Keep It
This approach is what we call a lease buyout. It entails buying a leased vehicle for personal use when the contract ends or even sooner.
If you intend to buy your leased car, you should first ascertain whether or not this is possible. If it is allowed by your leasing company, there will be a clause in your contract permitting the car to be sold by the leasing company to you.
Frequently Asked Questions
Can I Get a Lease Buyout Loan With Bad Credit?
If you want to buy out your vehicle, but don’t have enough money on hand to do so, you may consider getting a lease buyout loan to finance your purchase. You can take out a loan from many banks, credit unions, or online lenders to finance the buyout of your lease. However, this may not be the most cost-effective option, especially if you have bad credit.
Getting a loan with bad credit can be tricky. Your bank or lender may view your credit as a risk and subject you to high interest rates that will be expensive in the long run. In some cases, it may be worth improving your credit before applying for a loan.
Compare the terms of your loan to that of your lease before making a decision. Even if buying out your car seems like the best option, it may be unaffordable once you factor in the extra costs of paying off a loan.
What Is a Decent Credit Score to Lease a Car?
Leasing a car is a great option for people looking to build credit and earn rewards. However, if you fail to fulfill your lease obligations, it could negatively impact your credit score.
620 is the usual car lease credit tier for most dealerships. A tier between 620 and 679 is almost perfect, and dealerships see a tier between 680 and 739 as ideal. Once your score is above 680, there is a probability of receiving attractive lease offers.
What Is the Procedure for Disputing End of Car Lease Charges?
The best way is to send an email to the lease organization highlighting your dispute. You should then follow up with a phone call. In the email, you should attach an invoice copy and point out the charges you wish to dispute and the reason why.
Ending your car lease early might be an expensive move. If the cost of completing the lease is minimal compared to other options, then it makes sense to pay it through. Nevertheless, you might discover that the other options to end your lease early better suit your needs. You should explore several options and determine the most economical one for your case.
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