Three Ways to Get Out of a Car Lease Early
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Driving away in your newly leased vehicle was fun. By agreeing to a new lease, you took advantage of lower monthly payments, a factory warranty, and getting to drive a car with the latest features.
But now, for whatever reason, you want to get behind the wheel of your next car. It could be that you desire more fuel economy. Or maybe you like the utility and all-wheel drive offered by SUVs. Perhaps you want something less expensive, with even lower monthly payments.
The problem is, your lease term hasn't expired. Instead of selling your vehicle, you're still responsible for the remaining payments, whether they be over a few months or years.
Or are you?
Can you get out of a car lease early? Thankfully, there are ways to get out of a car lease before the end of the term. Let's look at the different ways you can end your lease and go shopping for your next vehicle.
The basics of leasing a car
When you lease a vehicle, it's a lot like renting a house or an apartment. You sign a contract to use the property for some time and agree to make payments each month while promising to keep it in good condition.
Also, similar to renting real estate, at the end of an auto lease contract, you forfeit the use of the vehicle and hand it over to the party from whom you leased it, also known as the lessor.
Since you return a leased car at the end of the contract, certain conditions apply to ensure you keep it in acceptable condition. You have to drive it under normal conditions and avoid subjecting it to excessive wear and tear. If you return the vehicle with damage, additional fees will apply.
Several aspects make up a lease agreement and play a part in deciding your monthly payment. Among those are the cap cost, money factor, residual value, and mileage.
The capitalized cost on a lease contract (also called the cap cost) plays a significant role in your monthly payment. The cap cost is the agreed-upon purchase price between you and the lessor, and the lower the amount you can secure, the less your lease payments month to month. The cap cost also affects the other elements of your lease agreement, so it's essential to try and get a good one. Some lessees make a down payment in the form of a cap cost reduction, further lessening their monthly obligation.
A car lease's money factor is similar to the interest rate on a loan for a vehicle. This financing charge added to your payments during the contract is also referred to as the lease factor.
Something that sets leases apart from traditional purchases is the mileage limit. When you lease a vehicle, there's a set mileage allowed per year, and it either raises or lessens your payments, depending on which you choose. Usually, the mileage limits on an auto lease are 10,000, 12,000, and 15,000 miles per year. If you decide on a higher mileage limit, your lease payments increase, and vice versa. If you return the vehicle with mileage above the limit on the contract, extra charges apply.
At the end of a lease agreement, you have the option of purchasing the vehicle and driving it home. This price is known as the residual value. When you sign the lease contract, the lessor determines the residual value by taking into account depreciation and the mileage limit you decide on.
Though buying a car can be fun, selling your old one can be a hassle. Whether you have a Honda, Toyota, or BMW, selling a vehicle takes up your necessary time. You have to take pictures, post ads, and answer phone calls from prospective buyers. But Shift makes selling your current vehicle easy. All you'll have to do is enter the make, model, year, and mileage on Shift's easy-to-use website, and you'll instantly receive a purchase offer that's valid for seven days. You can get a fair offer, better than at the dealership, driven by powerful machine learning algorithms and tons of data. And with Shift, there is no need to spend the extra time waxing and washing the car since we fully detail the cars ourselves before listing them for sale.
Ways to get out of a car lease
1: Transfer the lease
Can you transfer a lease to another person? Typically, the answer is yes, because most leases allow the lessee to swap the agreement with someone else. But before that happens, you have to find a party willing to take over the remaining payments.
One way to do this is by posting an ad on a lease trading website like Swapalease or Leasetrader. Though a fee applies, usually around $75 to $100, you can reach interested parties willing to take over your contract.
You may need to add extras to sweeten the deal, like putting up additional cash to attract interest. You have to consider whether forking over $500 or more is worth avoiding the remainder of your lease payments.
An even easier method of transferring your car lease is signing it over to a good friend or family member. But before you do this, it's essential to have a clear idea of who's responsible for any additional charges at the end of the lease for wear and tear or extra mileage.
2. Purchase the vehicle and sell it yourself
Typically, lease contracts allow you to purchase the vehicle for a buyout amount. Also known as the early buyout price, you can either finance or pay this amount in cash.
Once the vehicle's in your possession, you then have to go through the process of selling it to a private party for its current market value. Though this process can be somewhat laborious, you can net a nice amount of cash for a new car.
Instead of the time-consuming task of selling your used car privately, why not let Shift handle the details? Using Shift's simple and streamlined process, you'll get a fair offer driven by powerful machine-learning algorithms and tons of data. There's no need to clean up your vehicle because it doesn't affect the offer. And when it's time to search for a new-to-you car, Shift's website has a wide selection of full-inspected vehicles located across the country.
3. Buy your car and keep it
If you find yourself hoping for lower monthly payments or want to keep your vehicle for the long haul, a lease buyout loan could be the answer. Though this extends your financial commitment beyond the lease term, you now have the freedom to drive as you please, with no mileage limits or charges for wear and tear.
2019 Acura RDX (from $35,500)
2016 Honda Accord LX (from $19,300)
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April 15, 2022
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