How to Terminate Your Car Lease/Loan Early

We all know what a great feeling it is to buy or lease a new car, right?  Nothing better than that, especially when it still has that ever-popular, ‘new-car-smell’ that you just can’t get enough of, right?  Furthermore, you know you’re not going to have any mechanical problems for quite a while, it looks great, has great gas mileage, it’s affordable, it’s what you wanted, and most of all, your neighbors are jealous!  So let’s ask the question most people who just bought or leased a new car doesn't want to consider – What happens when the ‘new-car-smell’ wears off, the neighbors are no longer jealous, and you suddenly believe that perhaps this wasn't the best deal or car for you; how do you get out of the lease/loan early when you’re already a year or two into the deal?

According to “Walkaway Canada”, a Canadian auto leasing franchise, there are a few primary reasons people decide to get out of their auto lease or loan early. 

v  Job Loss – A person may be terminated or indefinitely laid off from their employer which will result in an inability to meet the financial responsibility of the auto lease/loan.

v  Disability – A person may become stricken with a physical disability, presumably, the result of an unfortunate auto or sports accident or injury.

v  Driver License Issues – Traffic tickets and excessive points against a person’s driving record can result in a revoked or suspended driver’s license.

Regardless of your reason for choosing to terminate your auto lease early, you should always know your options, as well as the specific terms and conditions of your particular agreement.  Knowing and having this information will only assist you in successfully terminating your lease early.

Once you've made the decision to end your auto lease early, you have to understand what that entails which is everything from preparing the car for return to the dealership to paying costly penalties and fees.  Most auto industry professionals and leasing experts will not hesitate to confess that auto leases weren't designed to be broken.  Nonetheless, many have also gone on record to state that almost any auto lease can be broken or terminated early—you just have to know your options and the correct way to have a successful and early termination.

Preparing  the  Vehicle  for  Return

Preparing the car for return will more than likely be the simplest, less expensive part of the early lease termination process.  This includes washing and detailing the car, ensuring all the routine maintenance has been properly taken care of is up to date.  Be sure to take photos of the vehicle after it has been detailed and be sure to take photos of the odometer, engine, and tire tread.  You want the car to look as good as it did when you first leased it.

Early  Lease-Ending  Options

There are several basic and most-common options for terminating your lease early which includes; returning the vehicle to the dealer, trade-in, payment take over, selling the vehicle, or buying the vehicle from the leasing company. 

v  Return to Dealer – Usually involves penalties and most expensive option. Some creditors view this as defaulting on a financial loan/responsibility and it can potentially have a negative effect on your credit report.

v  Trade-In – Lease new car from same dealer. Also expensive. Original penalties rollover into new lease which causes higher payments new lease/contract.

v  Payment Takeover – Find someone to take over your lease and payments.  This option can potentially backfire if the new party defaults on their obligation, the leasing company can hold you responsible.

v  Buy From Leasing Co. – Every lease has a ‘buyout’/’payout’ option.  The positive of this option is that it can be done at any point during the lease.  The drawback is; in many cases, current market trends are a factor, and you may pay more than the car’s value.

v  Sell Car – Use your payoff amount as price to sell car to a private owner.  This is an overall good option.  By selling the car, you avoid penalties/fees, and it’s a less expensive option, however, the higher your payoff is, the harder it is to find a buyer.

As with any contract-binding agreement that requires a financial obligation, it’s always a good practice to do a little research prior to beginning into an agreement – this is no different for ending your auto lease early.  It’s in your best interest to know what you’re getting into and to know what to expect throughout the process beforehand, so don’t be afraid to ask questions—not doing so could leave you with the short end of things.