Breaking a Lease and Other Options

There may come a time when the lease you signed last month has suddenly become a financial burden and you need to unload your vehicle. Whatever your reasons may be, know one thing, IT WILL COST YOU. Before you enter a lease agreement, make sure you have a solid understanding of your “termination” options and costs. You may never need it; then again, you never know. There are generally three options available to you when choosing to terminate your lease.

Pay the termination fee

The quickest way is to look in the back of your contract and look for the “termination” section to see what fees you will be assessed if you elect to terminate your contract with your lessor. Not all banks handle the situation the same, so I cannot generalize. One thing is for certain, you will be paying thousands of dollars to get off your lease.

Trade-in the vehicle

I have actually used this option a few times (on my ’01 325i and ’04 Mazda3). Essentially, you are trading in your car as if you purchased it. The dealer will appraise your car and make an offer. You will then be responsible for the difference between your vehicle’s “buyout” price and the dealer’s “trade-in” offer. This method is best when you have a popular vehicle with low miles and in excellent (no accidents) condition. In some cases, a dealer may even offer you more than your “buyout”, thus giving you some equity on your trade-in. It is important that the dealer does not know what your “buyout” is. Otherwise, they may just get an offer for the “buyout” price or less. Say nothing until they give you a figure and try to talk them up a bit.

There is a catch, though. Not all dealers are willing to buy out your car without having you purchase another from them. In my experience, only CarMax will buy your car from you without requiring you to buy from them. They will even offer you a quote that is good for 7-days. Contrary to popular belief, they will not always offer you the best trade-in value, so you may need to shop your car from dealer-to-dealer to get the best offer.

Use online lease swapping services

There are websites out there (such as LeaseTrader) that offer lessee’s the ability to trade your lease to someone else. They put your car on their online marketplace to see if there are other people willing to assume the remainder of your lease payments. Once there is a match, they will help you process the paperwork and do the transfer. I have not done this personally, but most folks seem to have a good experience with it and I haven’t heard of any horror stories, yet. Just remember that if you got yourself into a bad lease, you may not have much luck getting someone to assume it unless you throw in some cash incentives. Plus, it may also take you some time before you find someone willing to assume your lease. We’re talking weeks, maybe months.

An alternate solution

Another option that most people do not consider is reworking their lease into more affordable payments. This would be the preferred option if you really want to keep your car, but need to make the payments lower. Sites such as LowerMyLease should offer a good solution for those seeking to lower their lease payments.

Unfortunately, making a bad decision has it’s consequences. That is why I stress that you stay away from negotiating monthly payments and follow the steps outlined in my Auto Leasing Guide. Do your homework before entering any type of negotiation and don’t fall in love with a particular car because not all cars lease well from month-to-month. Have a few other options available just in case the car you want isn’t offering attractive lease rates.

24 thoughts on “Breaking a Lease and Other Options

  1. G, I am looking into trading my 08′ G37 coupe in. Havent decided what vehicle as of yet.

    I leased it in April 2008. 36months 12K/year MSRP $40,600 residual is $24,500 …It is journey model with premium pkg, sport wheels…everything except navigation and sport package. My payments are $500 a month.

    Right now the car has $11,600 miles on it. i have paid 12 exact payments so far. 24 payments still left.

    How would the trade-in work to get out of this lease and into another one?

    plz let me know your insight with where you think i stand right now if I was to go to a dealership…how much do you think they would give me for it..any equity I would have?

    it is in excellent condition. black on black color combo.


  2. Unfortunately, I think the G37 coupe’s residual values were greatly inflated when they were being leased last year, so you probably won’t be getting as much for it. The dealer would appraise your car and make you an offer, which will probably be thousands less than your current buyout price. You then have to call IFS (or check online) to see what your current buyout price is. You would then be responsible for the difference. That negative equity can be rolled into your new lease should you choose to. Or you can always pay it off and then get into the new car. My guess is that they will offer you around 28k-30k.
    If you really must get rid of it, I would suggest a private sale OR maybe finding a car that is offering a lot of rebates and discounts to help you offset the loss in the trade in (MB comes to mind). If you are interested, you can snap a few pics of your car and I can post it here to see if there are any takers. A lease swap may also be a good idea if you don’t feel like taking a loss on your car. You may need to call IFS about that to see what the requirements and conditions are.

  3. Isnt $28k-$30 what i should get considering the car is a year old? Is buyout price given with leases? Iv never heard of this term before.

    I called IFS, they dont know what I mean by buyout price. They only have information about the residual, mileage allowance, selling price. Or maybe it was the CSR i spoke with.

  4. the buyout is what IFS says your current residual value is. Typically it is referred as the buyout, not sure why the CSR didnt know. The estimate i gave you is what i think the dealer is going to offer you as a trade in. if you have an online IFS account you can find it there. otherwise, call again.

  5. OH GOTCHA! thanks G. Hopefully the currest residual is low enough to where I wont have much due out of pocket.

  6. Best of luck Roy. I hope the dealer’s offer isn’t too bad. I’m a bit concerned because I think IFS overvalued the G37s last year, but hopefully the dealer will give you something reasonable. Keep us posted.

  7. G i just got the payoff amount. He told me $34,560. Thats about 85% residual at this point. WOW you were right…i think infiniti shot too high on their residuals.

    There is no way any dealer would give me more than $30K trade in for the car.

    Id be lucky at $30K but who knows…hmm what do you think? your opinion?

  8. They said it is NOT negotiable and thats what the current buyout is for the vehicle based on what the market residual for the car is.

    so what are your recommendations?

  9. Ouch, that’s terrible. Well don’t feel too bad, I’m getting like $30k as my payoff and the dealer probably won’t offer me any more than 26-27k probably, and I only have like 8000 miles on it. The best course of action at this point is to either trade your lease to someone or put up your car for private sale. As mentioned before, if you are interested I can put your car up on the site and see if there are any takers. You can either post that info in the forums under “RIDE marketplace” or you can email me your pics, specs, price and your email at thewall(at)
    Oh yeah, the payoff is generally non-negotiable. The lease-end payoff however, can be. Unfortunately most don’t nowadays.

  10. My payment is $503 a month (no taxes on this lease because i got it on tax free day last year in april on all g37 coupes in stock at all houston dealerships for one day only)

    It is journey premium pkg model with sport performance wheels. Black on black..rosewood trim. bose audio…and 11700 miles. 24 payments left. MSRP was $40,600. I am going to consider putting it up on the site or just seeing first what i get at the dealership, and then just paying the negative equity and being done with it.

    Ill think it over…thanks so much for your advice in all this.

  11. FYI traded in my 09 murano one year early off a 3 year lease. Bought a prius IV [2010]
    at the perfect time. Gas prices were low and inventory was high. Got 25k for the murano and had 2500 in equity. Prius msrp was 27700 bought for 25100. I know I got a decent deal because the murono was listed on the dealers site for 25300 just before it dsappeared. Really like the prius — paid 29k for the murano new so not hurt too bad. It can be done.

  12. G:

    I’m currently in a lease with a captive leasing company. If I plan to relocate to a different state, what are my options? I still have a year and a half to go on the lease and still want to keep leasing the car.


    • Give the bank a call. They should know in advance. It usually isn’t too big of a problem because the bank will then adjust your sales tax. But there may be some restrictions depending on where you live and where you are moving to.

  13. G,

    I have a 2012 VW Jetta SE that I leased last November and I’m trying to get rid of it because my payments are too high and because I walk to work i have no need for the car anymore. I have a 3 yr lease but I am only about 8 mths in. What are my best options for me to get rid of my car without major penalties? It’s black on black leather good condition just a few scratches here and there but otherwise is good.

    Thank you.

    • First, check the payoff amount by contacting your bank. Go to carmax and see how much they will pay for your car. Hopefully they’ll give you more than what you owe or a bit less. If you owe more than carmax is willing to pay then you will have to write a check to carmax for the difference. I find the whole selling car process at carmax the easiest way to get out of your lease early. Go in the morning and you’ll be out by noon with no more payment to make but also no more car to drive. Be aware that if you put down any refundable deposit, you will not get it any of it back by selling the car to carmax.

  14. I have just traded my 2008 Jetta 2.5 that I bought a year earlier as preowned to passat 3.6 SE from 2012.
    I wanted to get rid of Jetta as the car was too expensive with $ 300 maintenance fees every 3000 miles.and the car had lots of problems. Not mention I found out by accident the car could have been in undisclosed accident. I wanted to swap the car for something the same value but the dealership did not give me any options but reading for a lease on the most expensive VW on the lot.
    The monthly payment for the car is over $600 as the dealership said I had very high negative equaty on from the old car. The numbers are astronomical. I want to fet out of this lease and do need another car. What would be the best option for me to terminate the lease and swap the car.

    • Mary, there are two ways dealers do “appraisals”. 1) they actually inspect the car and give you a trade-in value. 2) they will add up all the payments you owe and say that you are “that much” under water. Option 1 is typically the best. If your Jetta has been in an accident, there will definitely be a lot of lost value there. The best way is to get a buyout quote from your bank and compare it to your dealers trade-in offer and see how much the difference is. There is no way to avoid negative equity if your car isn’t worth anywhere near what you owe. I think $600 a month is a bit much for a Passat, but then again, don’t really know how much you were offered for the Jetta and how much you owe on it.

  15. The only problem I have had with leasing is projecting the mileage allowance. I was way under the allowance on my last two leases but at least it got me over $600 when turning in a Subaru Impreza. However, Mazda is part of the Ford program (VW/Audi too) where a dealer is quoted a higher buyout price than you have, so I lost that equity on my CX-9.

    Now I have the opposite problem. I have a 2011 Honda CR-V EX-L with 30,000 miles on it after 22 months of a 36-month, 12,000 miles/year allowance. Using your lease calculator, it appears I would have paid $18 more per month for a 15,000 miles/year allowance or $648 total over the 36 months. The contractual penalty is $0.20/mile so I’ll be paying $1,800 at turn in for those extra 9,000 miles or $1,152 more than if I had included them up front.

    Honda Finance says they just service the Lease and can’t negotiate the Terms. They said to contact the Dealer but don’t think they can change the terms either. Have you ever heard of anyone renegotiating the Terms?

    Right now, unless I buy the car, they will get $1,800 from me in 14 months for the extra mileage. However, if I paid them an extra $100/month starting now, they will get the money sooner plus they would get $1,400 even if I didn’t put the extra 9,000 miles on the car.

    Do you think there is any chance they might consider something like this?

    • I think you have a few options but it depends on your end game for this lease. The question is, do you want to keep the car at the end of the lease, lease another car, or just be free and clear once the lease terms are up?

      • Keeping the car is a simple procedure; just pay them the $18,000 buy out price and I accept whatever the mileage is. The option is to pay them $1,800 14 months from now and walk away. In addition, it looks like I’d have to spend an additional $700 for new tires between now and then.
        As expected, the dealer called and said there is no way to renegotiate the lease but he suggested trading the car on a new lease. I had thought about that option but also thought it would cost a lot more than his quick look at the numbers.
        As I said, I’m paying $369/month now plus I’d have to accumulate $178/month for the next 14 months to pay the mileage excess and buy the tires. He thinks he can put me in a 2013 CR-V EX for about $520/month and they will take my 2011 version as a trade. That sounds like a good deal to me as it would cost $540/month to buy the old car. I’ll have to listen again because it sounds too good to be true. That or I didn’t do the calculation correctly.

        • I would try to do a pull-ahead lease, but you have to make sure you can get fair value for your existing vehicle. Find out your payoff quote, and then do a pull-ahead lease right before you go over 36,000 miles. Use a Carmax appraisal as a negotiation tool. I did a pull-ahead lease on my 2010 Accord with about 14 months left… I had about $1000 negative equity that we rolled into the lease payment. However, as G has stated, waiting closer to the end of the lease and you’ll get better equity.

          That $540/month sounds like they are rolling a lot of negative equity into the payment. According to (which has an awesome lease calculator and very transparent lease numbers), a 2013 CRV EX on a 36 month, 36k mile lease with 6.5% tax is $297/month with TTL due at signing. 2013 CRV EX AWD is $303/month.

          • Thanks for the info about pull-ahead leases. I found the Weymouth website two years ago while looking for my current CR-V EX-L. I have been unable to find similar lease calculation sites for other car brands. Have you?

            I needed a backup camera because of my bad neck and in 2011 the only way to get it from the factory was to get Nav in the top of the line model. That’s changed as a backup camera is standard with all 2013 CR-Vs so I can save money now by downgrading the model version.

            The Weymouth site is a great research too as not only does it allow you to get pricing for 4 types of leases, the Cap Cost is also attractive.

            A new question: Could I do a pull-up lease for a different car brand (e.g. RAV-4) or might this be a better deal because it’s a like for like trade?

            As noted above, I am now paying $369/month and only paid $213 at signing and had no trade.

            I can do Pull-Up lease a CR-V EX for $399/month +$649 DAS but I’ll get 15,000 miles per year. With the EX I’ll loose Roof Rails, Leather, Heated Seats, Dual Climate Control and Nav. It would cost $14 more per month to get Roof Rails added. Going up to an EX-L w/o Nav would be $459/month. These seem to be a great deal for someone in my position. Do you agree?

            Based on the above, it seems they are giving me just a few hundred dollars less than my current $22,600 buyout price (note, buyout and trade in values can also be input into the Weymouth Honda Lease calculations).

    • I have not heard of people renegotiating a close-end contract, which is the case for all Honda leases that I’ve seen. I agree with Jon in that it all depends on what you would like to do between now and lease end.
      Before you do anything though, I would ask that you get a trade-in estimate and compare it to your buyout. If its around $1800, then in my opinion, I’d pay that off (or let the lease run out and pay the penalty) and get into something new. Remember, it is about $30 per month per $1000 borrowed. With that in mind, the difference between what you pay now $369 and what they propose on the new lease $520 is about $151, or $5436 after interest and taxes. I don’t see how you can’t get a 2013 CRV EX for less than $400 a month with little or nothing at signing.

  16. Actually, the Honda dealer will lease a new CR-V EX for $399/month for 15k miles and $200 due at signing. Currently buyout on my EX-L w/Nav is $22,587. I have 12 or 13 payments at $369 (inc 9% tax. $338.53 approx. base lease price w/ 12k miles). Buyout at end of lease is $18,098 which would mean almost all of the remaining payments go toward principal. Trade-in value quotes range from $19,000 to $21,700. If I keep the 2011 car, it will need $800 worth of tires in a few months. I figure, if I put tires on it, I have to keep it. Otherwise I think I should trade it now while they will give me $21,700 as is.

    Above, I said my over miles penalty would be $1,800 but that’s not accurate. At current usage of 1363 miles/month the turn-in penalty would be $2,600 for being at 49,000 miles.

    BTW, the Subaru dealer will lease a 2013 base Outback for $395 (tax inc.) for 42 months @15k miles/year and $1,000 due at signing. Biggest difference I see between the Outback and the CR-V EX is the latter has alloy wheels and rides at 5.5 inches versus 8.7. The Outback has integral roof rails and cross bars both of which are options on the EX. Which would you take?

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