What to do when truck lease is up

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Dear Terry,
I have a truck that is coming up to the end of its lease. The dealership is asking me if I want to end the lease and turn it in or go into another lease with a new truck. The dealer says that if I turn in the old truck and lease a new one I don’t have to give a down payment. To keep the truck I have now I would have to buy it for its value price, which is about $10,000. Are there any other options that I may have?

Richard E.

Dear Richard,
Well, you could just turn the truck in and walk home. The first thing you have to come to grips with is that you don’t own your truck — the leasing company does. So you are obligated to return the vehicle at the end of the term and, if it’s a closed-end lease, walk away.

What most people do is turn in their leased vehicle, get a new one and then continue with payments. As the dealer said, you can also buy your truck for the ” residual price” you agreed to when it was new. The problem with that last choice is that if you take out a loan to cover the residual price, you’ll likely end up essentially having a seven- or eight-year loan — the term of the lease plus the term of the subsequent loan.

You will wind up having paid an enormous amount in interest over the life of the two transactions and, since vehicles usually need more repairs after the fifth year, you could be faced with both car payments and significant maintenance bills.

You can also take a look at the services that try to match lessees with individuals who are interested in taking over their leases, such as Swapalease.com or LeaseTrading.com. There are costs associated with this process, and once again your lease agreement has to allow a lease transfer, but it is something for you to consider in your quest to end your lease agreement.

But, unless you’re over the contract or agreed-upon miles — or unless the trucks is not in very good shape and you’ll be on the hook for repair costs — you’ll probably be better off turning in your vehicle and leasing a new truck.