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.