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.com) 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.com 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.
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.
thanks
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.
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.
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.
OH GOTCHA! thanks G. Hopefully the currest residual is low enough to where I wont have much due out of pocket.
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.
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?
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?
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)ridewithg.com.
Oh yeah, the payoff is generally non-negotiable. The lease-end payoff however, can be. Unfortunately most don’t nowadays.
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.