If you are approaching the end of your auto lease now is the time to review your leasing agreement and decide what you want to do. Take the time to plan and research ahead of time to ensure you make the best financial choice.
What do you do at the end of a car lease?
There are three main options that drivers can take at this crossroads. You can trade in the vehicle and get a new one, return it and walk away or purchase the leased vehicle.
1. Trade-in for a new vehicle
If you are interested in getting behind the wheel of a different vehicle but not ready to commit to a purchase, trading in could be a good option for you. Before trading in make sure to investigate the vehicle’s value. You can use this number as leverage during the negotiation process. Depending on the specifics of your lease agreement, you may be able to dodge the wear and tear, disposition and mileage fees. Many dealerships offer exclusive deals to encourage drivers to continue leasing with them, so be on the lookout for any special offers available.
2. Return it and walk away
If this is no longer the car or leasing company for you, it might be time to return it and just walk away. Be prepared to pay some fees if you go with this choice. You can expect to pay the disposition fee and the typical wear and tear or mileage charges outlined in your lease agreement. But once that is settled you are good to walk away until you are ready to sign another lease.
3. Purchase the vehicle
If you have fallen in love with the vehicle, you have the option to purchase it at the end of your lease. This lease buyout option will be outlined in your lease agreement. To get the most out of the deal, understand the car’s value compared to how much the leasing company wants for it before going ahead with the purchase.
How to get out of a car lease early
If the car lease has become too expensive or the vehicle no longer meets your needs, you may want to exit the lease earlier than noted in your lease agreement. Consider these options before going ahead with a lease termination.
Ask for an early lease termination
If you are looking to get the vehicle off your hands as soon as possible, this option could work for you. But you will be expected to pay a termination fee along with the depreciation gathered on the vehicle. In all, it can be extremely expensive to go through with an early lease termination.
Not all leasing companies offer this option though, so check your contract. If you’re still unsure, give the company a call. You can request the total payoff amount for an early lease termination at the same time.
Find someone to take over the lease
A lease transfer is a great way to get out of a car lease. In this scenario, you just transfer your vehicle to a new lessee. This new lessee must still meet the lease requirements and be in your state, but it is a great way to get the vehicle off your hands. You will still need to pay a transfer fee, but it is typically cheaper than other options.
You can use a third-party service to help this process along too. A site like LeaseTrader can assist with finding someone to take over your lease.
Buy it outright
You can sometimes purchase your leased vehicle before the end of the contract. An early lease buyout usually still comes with fees — along with the payoff amount. You will need to factor in the car’s residual value and all remaining monthly payments.
The benefit is that you can potentially sell and come out ahead, or at least flat. But it requires fully calculating the value, and the trickier work of anticipating how much you might be able to sell the car for privately.
The bottom line
Leasing is a great way to get yourself a vehicle without having to commit but when it comes time for the lease to end costs can add up. Take the extra time needed to read the fine print of your lease agreement to ensure that you understand what to do at the end of your car lease.