What Happens if You Have to Get Out of Your Car Lease Early?

Dealers make car leasing very simple and many customers assume that getting out of a lease is as simple. This is not true. When leasing a car, you should be sure that you will be able to keep the car - and keep making payments - for the full term. If you are unable to do so, there are some serious financial penalties. For this reason, leasing a car is really not for those who have uncertain lives that may result in a sudden move or sudden change in financial situation.

Why Do I Need Early Termination for Car Leasing?

In reality, though, emergencies of all types happen and many people find that they cannot continue leasing a car. Getting out of a car lease early may be important if you can no longer afford the monthly payments and car costs or if paying for the lease is causing you undue financial hardship. In case this happens to you, you should first go back and read your car leasing agreement very carefully to see what penalties and what terms you can expect. Many car leasing contracts specifically state that you can't get out of a car lease until you've had the car for at least a year. For this reason, if you need to get out of a car leasing contract, you should wait as long as you can before doing so.

Option One: Buy the Car

You can sell your car if you can get some or all of the buyout money by doing so. To find out if this is an option, check with online sites such as Autobytel.com, Autoweb.com, CarSmart.com, Edmunds.com, Cars.com and Autos.yahoo.com to find out the current pricing of a car with the features, mileage, options and make of the car you have leased. Then telephone the car leasing company and ask for the most recent buyout amount. This is the amount you must pay to buy the car. If the numbers are pretty close, you may find that you can sell the car and pay off the car leasing company - although you will need to ask the leasing company if this is an option, of course. In some cases, you may have to borrow money to pay the car leasing company to pay for the car, then sell the car and use the money to pay off the bank. Obviously, this can get complicated and risky, especially if the car does not sell quickly. You will likely have to take some fiscal loss this way, but you will no longer have to make payments for the car lease or insurance.

Option Two: Get Someone Else to Lease the Car

Some online companies allow you to allow someone else to take over your lease. Sites such as SwapaLease.com and LeaseTrader.com pair those who want short-term leases with those wishing to get out of a lease early. Those looking to lease can look by car model or monthly payment. These sites are trustworthy and can help you find someone with a good credit history who can take over your lease. If the transfer goes through, you can save thousands of dollars in early termination expenses.

Your Very Last Option: Early Termination of the Car Lease

One final option is to simply hand back the keys to the car leasing company and opt for early termination of the lease. This has little risk but a huge cost. Fees for early termination vary but usually add up to thousands of dollars. Some car leasing companies will not allow you to walk away unless you have held the car lease for at least a year, meaning this may not even be an option for you. Worse, getting out of a car leasing contract early is entered onto your credit report, worsening your credit rating. This should be your very last resort when trying to terminate a car lease early.