Break a Car Lease? End a Lease? Terminate a Lease? Exit a Lease Early?

What are the options and least expensive way to end a car lease early?

As you may already know, getting out of a car lease is not as easy as getting in.

Quitting a lease means backing out of an original agreement that provided for low payments over a specified number of years.

Those low payments are made possible only if the lease is completed as agreed. Lease companies count on customers to complete their lease as scheduled.

However, for those who want or need to get out early, lease companies provide “early termination” or “early payoff” clauses in their lease contracts. These contract details are usually difficult to understand, making it impossible to self-calculate remaining lease balance.

Customers are usually surprised by the high cost of ending a lease early, often expecting to only have to pay a small “penalty” fee.

There are a number of ways to end a car lease early

Since car leasing is not like car renting, you can’t simply return your car to the lease company and walk away. Leasing doesn’t work that way and it’s definitely not the way to break a lease.

In order to end your car lease (“early termination”), you can return your car and pay the lease company what you still owe (“early payoff”), which could be substantial. At least, that’s one way to do it but not necessarily the best way.

The reason that retuning your car might not be the best way to get out of your lease is that the balance still owed on your lease can be much more than you might have anticipated, due to the way by which the lease company calculates early termination costs (read the small print on the back of your lease contract). Most people are very surprised when they learn just how much they owe. They quickly learn how little of their lease balance has been paid off, even after many months or even a couple of years.

There seems to be a common misconception that, to get out of a lease, one simply returns the car, pay some kind of penalty fee, and it’s all over. Not true. This is not the way it works, unfortunately. The actual cost of early lease termination can be thousands of dollars, depending on how much of the lease remains. The nearer to the end of the lease, the lower the cost to get out.

To determine how much you’ll have to pay to end your lease early, call your lease company and ask for your early-return payoff. There is no easy way you’ll be able to calculate or estimate the amount on your own since the amount is based on something called “realized value.” Realized value is either an estimated or actual sale value that the lease company would get by selling the car at auction after you return it. There is no way you can know in advance what that value will be.

Actually, you have a number of other less expensive options for getting out of your lease, some of which will be better for you than the others.

You’re looking for the option that will save you the most money and trouble, and protect your credit rating.

Lease transfer is the best and cheapest way out of a car lease

One your best options may be to transfer your lease to someone would like to pick it up and take it off your hands — a lease assumption. There are significant advantages for this method. It is low cost (no penalties, no payoffs, only a small transfer fee), it is relatively easy, gets you out clean, and it does not affect your credit score.

There are potential “buyers” out there who are looking for short-term leases on late model cars without going through dealers and suffering all the extra costs of leasing a brand-new car.

However, to get out of your lease using this method, you need to follow the correct process and check to make sure your lease company allows it. You can’t simply let someone take over your lease without the lease company’s knowledge and involvement. It would a violation of your lease contract. The new “lessee” must get approved and sign new lease papers.

The good news is that help is available, online, on the Internet from services such as Swapalease.com.

How does it work?

There are a number of specialized lease transfer companies on the Internet who will list your car and help and find “buyers” who are interested in taking over your lease. These companies help with the lease assumption process and paperwork. They charge a reasonable fee for their services — a fee that is much smaller than a lease company’s early termination costs. Since these companies work directly with the lease company and handle all the details, the process is easy and painless.

Although there are a number of good lease transfer companies out there, the company that we recommend is Swapalease. They are very reputable, have been in business for years, and have helped thousands of people get out of their car leases. We’ve recommended them for years and continue to get good feedback from people who have used them.

There are no penalties when using this approach.

You can get an instant free quote from Swapalease.com regarding the cost of listing your car so that interested “buyers” might see it. You’ll also be told immediately if your lease company or bank allows lease transfers so that you’ll know right away if this technique is going to work for you. Swapalease also guides you in listing your car so that you attract the most potential “buyers.”

An important benefit of this method of ending a lease is that it has no effect on your credit and will not prevent you from getting another car loan or lease in the future.

You can get a “buyers” viewpoint on taking over a lease by reading our article, Short Term Leasing.

What happens next?

Once you end your lease, you’ll most likely still need transportation, in the form of another vehicle. Buying a good used car is a natural solution. However, buying used cars can be a bit more tricky than buying or leasing a brand new car. See our article, How to Buy a Used Car, for more details.

If you’ll need to finance your used car purchase, look at your local bank or credit union as a possible source of a loan, or consider a reputable online auto loan provider such as Auto Credit Express or InstantCarLoan.com where you find out almost immediately if you can get approved.

There are also other ways to end a car lease early

Since the lease transfer solution is only one way to end a car lease, it doesn’t work for everyone. Some lease companies simply don’t allow transfers.

We have provided a comprehensive how-to article, Lease Termination Guide in our popular Lease Kit that contains a detailed explanation of all the other ways to exit a lease, including purchase/sale, trade, 3rd party buyout, and more. We include examples, and instructions on how to determine which option is best for your particular lease situation.

Summary

Getting out of a car lease is not as easy as many people expect. Depending on remaining lease balance, the cost of early termination can be shocking. However, a lease transfer can be the right answer for some people. Cost is minimal and it leaves no bad after-effects.