If you’re looking to buy a new car or are tired of making monthly payments, you may be interested in finding ways to get out of your lease early.
An extended car rental can make you feel like you’re paying forever. You have several options available if you want to get out of the lease altogether.
What Does It Mean to End a Lease Early?
When you sign a new car lease, you agree to make a certain amount of monthly payments. You also agree to participate in the routine maintenance and repair of the rental vehicle.
The rental contract clearly states the terms of the agreement, including how long you must pay and your monthly payment fee. If you decide that you no longer wish to make these payments, you can try returning the rental vehicle to the dealer.
However, ending a car lease early isn’t always easy. While you may have the option of getting out of your lease early, including buying early or finding a new tenant, you can’t simply hand the car over to the dealer and stop making monthly payments.
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How To End Car Rentals Early
You have several options available for ending your car rental early, including:
Ask About Early Termination Options
Most car leasing companies offer an early termination option. Some car rental companies may allow you to surrender your lease early without a termination fee. However, you will still be responsible for any remaining payments. It Federal Consumer Leasing Act require that all leasing companies describe this information in your leasing agreement. Check your rental contract to see what options you have.
Early lease termination is the most expensive way to get out of a car lease. You should reserve this option as a last resort when you no longer have the money to make payments or you can no longer meet the terms of the contract.
Transfer Your Lease
If the early termination fee is too high, you may be able to transfer your lease. Lease transfer requirements and eligibility vary between states and depend on your car rental agreement. The leasing company may also charge you a lease transfer fee, but this is often much less than the cost of terminating the lease early.
You can transfer your current car lease to a family member, friend or personal buyer. Several online companies also offer services that help you find buyers for your rental car. Whoever decides to purchase your lease will be subject to credit checks and deposit requirements, just like when you signed the original lease agreement. Once the lease transfer is complete, the new tenant will start making payments.
Buy Your Rental and Sell Your Car
Depending on the value of your vehicle, you may also decide to purchase your lease. Purchase of a lease involves paying off your remaining monthly payment plus an early termination fee in cash. Many people choose to purchase their lease at the end of their term. Then, you can sell the car to recoup your costs. Before choosing a lease purchase, you’ll want to evaluate the amount paid and the value of the vehicle to see if it’s worth it.
This includes comparing the market value of your vehicle to the residual cost. Market value, or current value, refers to how much the vehicle is worth. You can use a tool such as the Kelley Blue Book to calculate the value of your car. This option also requires you to sell the car yourself after purchasing it from a leasing dealer. Selling a car through private sales is sometimes more difficult because lenders are less likely to issue money to buyers who are not working with a dealer.
It is possible that you can make money with this option too. If your car is worth more than what you owe the leasing company, you can actually make a profit selling your vehicle. This can give you a little extra cash to buy a new car, either through a new lease or as a down payment.
Exchange Your Vehicle
Your dealer may let you exchange your vehicle for a new lease. The dealer usually rolls over your existing monthly payment and transfers the cost to the new car payment. However, it’s important to note that this option often results in significantly higher monthly car payments. Trade-in is also usually only an option when you buy or rent a new car from the same dealer that your current car lease is with.
Most of the options available for ending your lease early come at a cost. These fees may be minimal, especially if you only have a short lease. However, it could also cost you several thousand dollars to terminate your lease early. However, either of these options is better than defaulting on your car payments. If you stop paying, the leasing dealer will likely take the car back. Then, they’ll sell it at auction for a penny, leaving you responsible for the difference.
Reasons to End Car Rental Early
There are several reasons why you might want to end your lease agreement early, including:
- You moved to a new city or state: If you’re moving to a new city or state, you may decide not to take your car with you. Transporting a vehicle may be too expensive, or the type of vehicle you have may not be suitable for the weather or driving conditions in your new hometown.
- Your financial situation has changed: If you are in financial trouble, terminating your lease may be the right choice. Of course, you’ll want to consider the proceeds amount and rental transfer fees.
- You are enlisting in the military: If you enlisted in the military and were stationed overseas, you may not be using your current vehicle.
- You want to upgrade or downgrade your vehicle: If you have kids or are sending your teens to college, your car needs may change. If you bought from the same car dealer, you may be able to work the remainder of the rental payment into the cost of the new or used car.
Ending a car lease early often comes with early termination fees, meaning it’s important to weigh the pros and cons first. For example, if you move to a new city by public transportation, you may no longer need your vehicle. So while you will pay a fee to terminate your lease, it may be less than continuing to pay your current lease payments each month.
Tips for Getting Out of Early Rent
There are a few things to keep in mind as you consider your options for getting rid of the rental car early, including:
- Gather information about your rent before you stop paying: Once you have information about your lease, you can make the best decision for your situation. This includes how much is left to pay, the residual value of the car, and how much the leasing company charges for transfer leasing.
- Take your vehicle to a third-party mechanic: The leasing company may also charge you extra if they determine that there is excess wear and tear on your vehicle. Take your vehicle to a private party beforehand to document any required maintenance or repairs.
- Wait a few months to exchange your vehicle: If your vehicle’s residual value is low, waiting a few months to exchange it can help bridge the gap. This can cause you to owe less to get out of your lease early.
- Ask about difficulty options: If you want to get out of your lease early due to financial difficulties, you may qualify for other hardship programs available through your leasing company. For example, some leasing companies may waive fees for transferring leases or temporarily suspend payments for a number of months.
- Clean your rental car before selling it: Cleaner cars tend to be sold for more money. Schedule auto detailing before signing up if you want someone to buy your car at the best price.
Before you end your lease, be sure to compare all your options and decide if it’s the right choice for you. Everyone’s lease contract is different, so it’s important to choose the option that works best for your situation.
Finance & Insurance Editor
Elizabeth Rivelli is a freelance writer with over three years experience in finance and personal insurance. He has extensive knowledge of various lines of insurance, including auto insurance and property insurance. His byline has appeared in dozens of online financial publications, such as The Balance, Investopedia, Reviews.com, Forbes and Bankrate.