How to Get Out of a Car Lease
There are four common ways to have a car in your possession or in your name: own outright, finance to own, lease, and rent for short periods. Today, we will take a look at car leases. Millions of people lease cars instead of buying them or financing them because they like to switch vehicles often. Lease contracts don’t last too long but there are times when people want to get out of them. Here are some tips for getting out of a car lease.
Transfer the Lease
The most common method used to get out of a lease is to transfer the lease. This is a common method because it is incredibly easy to do. All you need to do is transfer the lease to a third person. Be warned though; you might still be named on the contract, which means you can be held accountable if the third person does not pay the monthly bills. A transfer fee ranging from $50 to $500 will also be assessed.
Return the Car
Returning the car is another option for you when trying to get out of a car lease. The disadvantage with this option is that you will need to pay some penalties. The vehicle will need to be brought back to the leasing company. You will then have to pay a lease termination fee as well as the rest of the vehicle’s depreciation. You really should use this option as a last-ditch method when trying to get out of a car lease.
Trade or Sell the Car
Another popular option available is to trade or sell the car. This is commonly used by leaseholders who want a new car or a newer version of the car they are leasing before the lease expires. If you wish to sell the vehicle you will need to buy it outright from the leasing company. Find out from the company what the payoff amount of the vehicle is and then pay the early termination fee when you buy the car.
Instead of selling the car to end the lease you can always trade it in at a dealership. When you trade it in you will be able to avoid paying taxes on it since the dealership will handle the purchase of the vehicle with the leasing company. You will get less value when trading in the vehicle than if you were to buy it from the leasing company and then sell it to a third party.
Default on Payments
Another option you have is to default on the lease payments. This is not something that is recommended but if you have no other way of getting out of the lease it might be your best option. This option is a last resort when you can no longer afford to make payments on the lease. If you decide to default on the lease you will notice a change in your credit score and it will not be a favorable one. It is quite possible you will be hit with a collection for unpaid early lease termination fees.
All of the options mentioned in this post can be performed when trying to get out of a car lease. Only a few of them are recommended unless you are stuck in a last resort situation.