How To Get Out Of Your Lease

If you need to get out f a car lease early, you may have several options to avoid taking a huge loss.

1. Read the Fine print in your contract

2. CONSIDER A TRANSFER OF YOUR CAR LEASE

3. TRY NOT TO MISS OUT ON PAYMENTS

4. CHECK OUT THE EARLY TERMINATION CLAUSE TO PROTECT YOUR CREDIT SCORE

5. REMEMBER, THE PAIN IS ONLY TEMPORARY

“How do I get out my lease?” Last month my friend Deborah sent me a text. I could sense the urgency of her request. She planned to move overseas, and wound not be able to take her Jeep Grand Cherokee with her. Deborah still had 10 monthly payments to make -- and didn’t know what to do with her vehicle.

It’s the time of the unexpected and everything you thought you wanted has now changed, including many of our monthly car payments on that newly leased car. 

Maybe you now work from home, and no longer need a car. Maybe you need to downsize, because you are taking a hiatus from the workforce. Or maybe you’re feeling unsteady in these times and want to trim your monthly budget over time. Whatever the cause, the car lease that you could easily afford five months ago is now one more thing keeping you awake at night.

If your lease is causing you stress, you are not alone. At the onset of the Covid-19 pandemic, the leasing market began to take a tailspin. “We’re seeing record levels of delinquency on loans,” Michelle Krebs a Executive Analyst for Autotrader.

First things first: a vehicle lease is a contract with regular payments and associated fees based on the ability to make good on the promise to pay. Before you skip a payment, take a beat, and consider your options. Failure to pay on time is called defaulting on your lease, and has all kinds of ramifications on your credit and how much you will ultimately owe.

But so far, most lenders are not anxious to repossess cars over late payments. Defaulting on payment isn’t good for the customer, the lender, or the dealer. Instead, if you’ve lost your job, experienced a pay cut or a disruption to your business, the lender may be apt to negotiate with you, at least in the near future. “Before you make the payment call up the lender, they are working with consumers,” Krebs says. You may find that your lender is willing to accept a late payment without penalty.

While you might have leased your car from a dealership, the actual money owed is up to the lender. If you want to hang on to the car and anticipate a return to normal work, you can express that to the lender. You might be able to slide on the due date on your payments, without needing to apply for a deferment.  If your dealer doesn’t grant you the lenience you need, look into a deferment, which should be outlined in the terms of your lease. The downside of putting off payment as a deferment is that you’ll still see interest accrue on the loan until you catch up with payments.

“ We could’ve never had it all /
We had to hit a wall / So this is inevitable withdrawal”

— - “Tears Dry On Their Own,” Amy Winehouse

But what if the issue isn’t cost, but that you just don’t need the car anymore?

That’s the situation Deborah found herself in. If you need to get out your lease, there are other options that will save you from simply taking a massive loss.

Let’s say you’ve got a friend who wants to take over your lease. It may be possible to transfer the lease to someone else. Or you may be able to find an anonymous taker through a service like Swap-a-Lease. Swap-a-Lease matches potential buyers with sellers online, for a small fee. To use the service, you need to enter basic details on your purchase. The online inventory gives you a sense of the broad range of monthly payments consumers make on the vehicles they lease from month to month. Read the fine print carefully for documents that you may need to provide and for additional liability you may take on. 

Let’s say that your lease is up, and you need to return the vehicle, but aren’t comfortable going into a dealership and dealing with face-to-face human contact. Some dealers are getting their online businesses up to speed and maybe able to work with you from afar. But you may choose to wait especially if you discover you may be eligible for a lease extension. If you plan on leasing a new car from the same dealer, you may find that you have bargaining points to negotiate a deal. Be wary of getting trapped into paying more if you still owe money on your first leased vehicle – its best to have a clean break without carrying over.

Now for the bad news, if at all possible don’t skip out on your lease payments all together. Your credit score will take a big hit, which could impact you in all kinds of negative ways. If you default on payments, the lender has the right to take the vehicle back, or repossess it, and charge you for the additional costs. All of the headaches also mean the lender can tack on fees for the delinquency. Let’s say you ignore those bills in the mail. The lender even may choose to sue you for damages. Yikes.

You do have a few other options to explore. You can look into “early termination.” It all comes down to what’s in your contract, and specifically in the “termination clause.” Here’s where you can pay to end the lease including fees and money still owed. Taking this option will protect your credit score.

Buying out your lease and selling the car is another viable option, if you are up for extra leg work. First contact the lender about the amount of money owed to get out of the lease, including any fees.

Leasing gets complicated, and it's best to not rush into any decisions without understanding the ramifications. The best advice when it comes to making changes to your existing deal: don’t be afraid to ask questions, and always read the fine print.  The silver lining is that eventually it all works out. Deborah was able to offload her lease on a friend-of-a-friend. She has since jetted off to her home, car free.