How to End a Car Lease Early

How to End a Car Lease Early

Car Buying / By
Table of Contents

If you have an auto lease, there might be many reasons why you need or want to get out of it.

  • If you are enlisted and you have to PCS overseas and you can’t bring your car, you might need to end your car lease early so that you are freed up to buy a new car when you get where you are going
  • If you suddenly have a change in your income or an unexpected financial situation, you might need to get out of your lease because you can no longer afford it
  • If you really like your current car and you want to stick with it forever, you might need to get out of your lease so you can purchase it 

No matter the reason why you want to end your car lease early, you can get out of your auto lease early in one of four ways:

  1. Terminating your lease
  2. Trading in your lease for a new lease
  3. Transferring the lease to someone else
  4. Buying the car and keeping or selling it yourself

So let’s look at all four options in more detail and how you can find third-party companies to help you.

1. Terminating Your Lease

How to End a Car Lease Early

The first way to end your car lease early is to terminate the lease. For this, most companies will charge you a termination fee. 

That fee can be surprisingly expensive; it’s usually the difference between the balance you still owe on your lease and the residual value of the car.

The only exception is for active duty service members who need to terminate because of orders. 

If you do not fall under this exception, you might be responsible for thousands of dollars if, for example, your current lease payoff is $20,000 but the residual value of your vehicle is $17,000, in which case you would have to pay that difference of $3,000 in order to terminate early.

Pros:

  • You might not have to pay excess mileage fees
  • You won’t have to worry about monthly payments

Cons:

  • You will likely be charged a substantial fee, including taxes and termination charges
  • Your lease might not allow an early termination (but might allow early buyout; see #4)

2. Trading Your Lease In

Trading Your Lease In

Another option is to trade your lease in for a new one. In most cases, your auto lease will include an option to buy the car once your lease is over, and it’ll have a buyout price listed. If you are lucky, the trade-in value is higher than that buyout price, so you can put the trade-in value of your current vehicle toward the purchase of a new vehicle or toward the lease of a new vehicle.

Some downsides here are that most leasing companies prefer that you have an excellent credit score. So, if your credit score has changed at all for the worst since your original auto lease, you might not be able to get a new lease, and if you do, it might cost you significantly more.

Similarly, if they allow you to trade in your vehicle for a new lease or a new auto loan, the amount that you still owe toward the original lease might just be coupled with the amount for a new lease, in which case you’ll end up basically paying for two vehicles at once, especially if you are trying to trade in your vehicle early.

Pros:

  • You can trade a car in that you don’t like for a car that you do like
  • You can use the equity in your current lease to help bring down the cost of a new lease

Cons:

  • If your credit score has dropped, this may not be an option, and if it is, it might be incredibly expensive
  • Your monthly costs if you still owe on your current lease might be rolled into your new lease, meaning you could just end up making double payments. 

3. Transfer Your Lease

Transfer Your Lease

Another option, especially if you are facing a change in your circumstances and can’t afford your lease anymore, is to transfer it. Some dealerships will let you transfer to another person, something called lease trading.

This is not a guarantee, though.

Not all terms or contracts will allow this, and in some cases, you might have to be current on your payments, or you might need to have a specific number of months left on your lease before they will allow you to do this.

You will also likely face transfer fees.

Assuming you are allowed to do this and you don’t have any friends or family who want to help you out of a tough spot, you can use third-party websites to find someone who wants to take over your lease. 

Note: A very important note is that some leasing companies might still hold you responsible if the new party you find defaults on the payments for the lease you transferred to them.

Pros:

  • You won’t necessarily have to pay as much as #1 option
  • A new lessee takes over your payments and expenses

Cons:

  • IF it is allowed by your contract, the new lessee might have to meet specific criteria so someone you know who is willing may be ineligible
  • Not all companies allow this
  • Some companies hold you financially responsible if the other person defaults on the lease

4. Buying the Car Outright

Buying the Car

A fourth and final option, which is much more feasible for most people, is to buy the car outright. With this, you don’t have to wait until you are near the end of your lease.

If your lease has an option for you to buy the vehicle, you can typically buy it early, sell that vehicle if you so choose, and use the sale proceeds to cover the cost of breaking that lease. Or, simply buy the car outright and keep it because you love it so much.

This is a highly recommended option for someone who might want to keep their car but, for example, is struggling with the high payments of their lease. Third parties can be used to find a loan from another bank with more favorable terms, which then means buying the car outright from your current lease and paying down a more favorable auto loan.

Pros:

  • You have the option of keeping your car outright
  • You can buy the car and sell it to cover the difference in any fees
  • You are more likely to have this option available to you when other options aren’t, especially for an early termination
  • You can use third parties to facilitate this process in a much easier fashion 

Cons:

  • If you decide to sell the car to make money, those profits might be taxable

If you are looking into this final option, you can use third-party companies like Lease End to help you buy out your lease. They let you purchase the car that you have currently been leasing instead of returning it to the dealership. They make the process simple by helping you figure out what that final buyout price would be, finding financing options for a new loan rate, and handling all of the paperwork to complete the process. While the heavy lifting can be completed within a matter of minutes, the full process only takes a couple of weeks.

There are several factors that influence the potential buyout price, particularly the residual value of your car, any remaining payments you have, sales tax, and registration fees. At any time, you can choose to use a company like Lease End to buy out your least vehicle, even if you have unique circumstances.

Summing Up

Whether you are deploying, want to keep your car, or have a change in your financial situation, you can get out of a car lease. But no matter what, look at the contract you have to see what options are available to you. Some lessors won’t let you do a transfer, while others won’t let you sell to a third-party dealer. There may be early termination fees, but the bottom line is that you have many ways to get out of a lease if you want to, and using a third-party company like Lease End can make it much easier to start that process.

Related read
Latest posts by Axle & Chassis Team (see all)
Scroll to Top