Can You Terminate Your Car Lease?
Ever heard the saying, "before you get in, know how to get out?" If you're thinking about leasing a car make sure you fully understand the leasing contract before signing; especially your contractual obligations for termination. While getting into a lease is easy, terminating a lease is not. Many people commit themselves to a leasing contract without fully understanding the ramifications of early termination.
Early lease termination is the number one reason people lose money when leasing. You can terminate your car lease early, but it's usually very expensive. Only consider leasing instead of buying if you are very sure you will be able to complete your lease contract. There are many advantages to leasing a car but those advantages come with a very specific contract that is hard to terminate affordably. Many leasing contracts don't even allow early termination until the lease has been in place for a minimum of 12 months.
Do You Need to Terminate Your Lease?
You decided to lease a car and now you want out. You had another kid and the Camry isn't big enough anymore. You thought you could make the payments for your Mercedes but now think they are too high. Did you really take on more than you can afford or make a bad decision? Take a hard look at your reasons for wanting to terminate your lease. If you do not absolutely have to terminate, then don't do it. A car lease is a contract with stiff penalties for early termination. You could easily end up paying the remainder of the payments plus fees and penalties. Additionally, terminating a lease early can ruin your credit can make it very hard to get another car.
Surrendering Your Car Does Not Terminate Your Lease
Some people have the mistaken belief that they can terminate their lease if they give the car back. Nothing could be farther from the truth. Even if you return to the dealership and work out a "deal" to get a different car, you are most likely still paying the early termination fees and penalties stipulated in your contract. Many car dealers use misleading advertising to get you to trade in your leased car for one from their dealership. The dealer takes the fees and penalties, rolls them into your new loan and spreads it out over so many months that you don't notice their inclusion. All you do by trading in a leased car before the lease is up is fall farther in debt since now you'll have to pay off 2 cars.
Car Lease Trading: An Alternative to Termination
Instead of committing financial suicide by early car lease termination, consider trading your lease. You will find many companies online who can help you explore this option. Car lease trading takes your lease and reassigns it to another person. You will pay some fees when you list your car in their online lease trading classifieds.
While you are looking to get out of a lease, other buyers would like to pick up your lease. It is a good deal for you because you don't pay for the remainder of your lease and it's a good deal for them because you have already paid the down payment, monthly payments and for much of the car's depreciation.
Lease trading is not inexpensive but the charges are nothing compared to what you would pay in termination penalties. When you trade a lease a new buyer takes over your car lease, puts their name on the lease and removes yours. Your credit will stay clean and you won't have to pay early termination fees. By trading your lease you can assume a shorter term lease with no money down and avoid the complicated repayment plans dealerships will try and push on you.