How to Get Out of a Car Lease Early
Back in the days when Ford was creating cars and he decided to make them all black, he had discussions with his staff about how to make his business sustainable.Henry discovered that cars don’t need to break down after a few years to get people to buy new ones; he realized that people become tired of what they have and buy new stuff as a result. It stands to reason that people may want new stuff every few years, but why do people want to get out of their car lease early. Some people like leasing cars so they have something new for a while, so why do people want to get out of a car lease early?
Why Do People Want To Get Out Of A Car Lease Early?
- People who are having a mid-life crisis and are smart enough to not buy the flash car, so they lease it instead. Their crisis then ends and they are stuck with a lease car so they want to get out of their car lease early.
- Some people cannot afford the payments. They are sometimes cheaper than payments for a new car, and even so, they are sometimes more of a burden than people realize. Such people may try to get out of a car lease early.
- Some people do it to impress other people, only to find out that either their fling is over, or the other people have moved on and the leaseholder no longer needs the car.
- Some people think they will be doing lots of traveling for a job or some sort of relationship, and then things go wrong and they don’t need the car anymore.
- Some people finally read the small print and suddenly discover that their leased car is wholly unsuitable for them. They may require the car to drive from one state to another on a frequent basis, only to discover that the lease they have is cheap, but it has a relatively low mileage allowance and big fees for going over the mileage allowance.
- Some people lose their jobs or need to cut back and so get rid of their car lease. It is times like that when people are glad they didn’t buy a car.
Most People Don’t Want To Get Out Of A Lease Early
Leasing a car is fun. You get to take out a brand new car and drive it around as if it were your own. You get to drive around in it for three years and then hand it over before the car is even out of warranty. If you have a good head for money, then leasing is a very viable option for wealth builders who think of leasing as more of a service, like buying a three-year bus pass, instead of thinking of it as an investment.
Leasing cars is best for business owners, especially since the lease expenses may be deducted on the business tax returns. Lease cars are also handy for people who do not like to be bogged down with just one car through the year. Many government, FBI and CIA agents lease cars rather than buy them because it allows them to change their personal ride every few years.
Some people have been stung when buying cars in the past. They have bought a car and then lost it for one reason or another and still had years of payments to make on a car they don’t own. That is another reason why people like to lease cars.
Mistakes That Car Leasers Make
Paying too much in advance and then losing the car is a big mistake that some leasers make. You may pay a bigger fee upfront in order to secure cheaper payments, but if you do, make sure you have adequate insurance to cover yourself if you lose the car.
Mathematically, leasing for too long is a bad idea. The longer you lease, then the less value for your money you get when compared to buying a car. Leasing for three years is about perfect. Think about it this way, if you lease a car for 12 years and you buy a car on finance with a 12-year term. After 12 years, you get a car if you bought it, but you have to give up the car if you leased it. In terms of value for money, a leased car is better value for money up to three years, after which, the scales start to tip in favor of buyers rather than leasers.
Not buying GAP insurance is pretty dumb if you are leasing a car. The amount the car is worth will drop sharply when you drive it off the car lot, and if you have some sort of trouble, your insurance may only cover you for the value of the car, which may not cover your lease obligation.
The mileage allowance is a big sticking point because some people are screwed over by it. Some car lease companies offer really low rates, but they set the mileage allowance really low. They know that people will go over the mileage allowance and have to suffer extra charges. Find a car lease company that offers a good service and is up front about their mileage allowance. They may cost most, but customer focus is still a big deal, especially when some car lease companies are out to sting you.
What Penalties May You Suffer If You Get Out Of A Car Lease Early?
The penalties you will have to pay are going to depend on the leasing company and how the leasing company makes their money. Some lease firms offer low rates because they make their money in the long-term. They don’t see a good return on their investment until most of your payments are made, which is why they try to at least break even when you get out of your car lease early.
Some charge penalties because making money on leases that end early is part of their business. Others do it because they make their money selling their cars and they have to account for the loss of sale value as well as the car depreciation. Here are some of the fees you may have to pay to get out of a car lease early. You will probably be charged more than one of these charges.
- All of the payments remaining on your lease
- 75% of the payments remaining on your lease
- Month of payments for your lease
- Early termination fee or fees
- Preparation costs for selling the car
- Depreciation costs for the car
- Damage costs that you would have had to pay anyway
- Transporting or storing the car
- Any taxes associated with your lease that were integrated into your payments
- The negative equity between the current value of the car and your lease amount
Examine your loan agreement and look for fees before you try to get out of it early. If you are charged a bunch of fees that are not mentioned in the agreement (the online or offline one), then you may be able to take legal action to have the fees waived. You may even be able to have them all waived because the leasing company’s actions were naughty.
How Do I Get Out Of A Car Lease If They Want All The Payments?
If the company wants you to pay all of the premiums before you are able to give the car back, then you are probably going to have to pay them. It is the sort of thing you may need to check out before you take out the lease.
Get Out Of Your Lease By Paying Off The Premiums
Paying off the premiums is the most foolproof way of getting out of your lease. It is also the most foolish when you are paying for the remaining term and giving the car back.
Sell or Give The Lease To A Friend Or Family Member
If you are going to pay the premiums, then give the car to the family member or friend for the remainder of the lease. You can give it as a present, or you may take a small payment from that person and cut your losses a little.
The Lease Company May Allow You To Buy The Car
If the lease company says you are able to buy the car off them, then you have a little math to do. You need to figure out two small problems.
1 – Is the cost of the remaining payments higher than the cost of buying a car?
If the remaining payments will cost you $5500, and the car costs $7000, then you may benefit from paying the premiums.
2 – Is the cost of the remaining payments higher than the cost of buying a car when you add on the sale price of car?
The remaining payments cost $5500, and the car costs $7000, but it can be sold for $3000, then you should buy the car.
You May Transfer The Lease To Another Person
Instead of giving the car to another person while you are still the leaseholder, you may transfer the lease over to another person. You may be able to do this with an agreement with a legal advisor, or with the lease company or the lease may mention such a deal. Some companies openly charge for a transfer and will brag about their fee as a selling point.
Buy The Car And Keep It
You may have lost some money on it, but the way to lose less money is to buy the car and use it. There is not a strict deadline on when the car should be used. You may buy it and keep it in your garage for 20 years until you need it again, at which point you could probably sell it for a profit as a vintage car.
Trade The Lease For Another Lease
If it is the car you are having issue with and not the payments, then you may be able to trade leases with another person and keep paying the same amount. There will probably be a transferring fee, but you will otherwise spend the same amount of money.
If you are struggling with the payments, you will have to find somebody who wants another car and wants to trade leases on their car that has smaller payments. Such people are difficult to find since most people who opt for cheaper payments are doing so because they have less disposable income to play with.
Your Final Option is a Voluntary Surrender
This is where you tell the leasing company that you cannot afford to make payments anymore and you hand over the car. Giving them the car will stop them from having it collected from your house, which will save you a few hundred dollars in fines. They may also come after you for the rest of the lease money, but if they win, you will probably face fewer fees than if you simply kept the car and didn’t pay.
If you are lucky, they will have protocols for voluntary surrender, they will sell the car, and then they will only sue you (charge you) for the amount of profit they would have lost. In many cases, this is far less than what you would have otherwise paid (unless you were near the end of your lease term).
Conclusion – Those Are Your Reasons And Your Options
We have covered why people want to get out of a car lease, and why they want to get out of a car lease early. And, also why many people think car leasing is a good idea. We have also covered the many ways you may get out of your car lease early. If you feel like we have missed some, it is because they are part and parcel of the options we gave. For example, you may be able to sell the lease or the car itself to the leasing company, but that is the same as selling the car after you have bought it (which is one of the headers), and selling back to the dealer is usually the fastest way to lose lots of money on the car.