It’s part of our car buyer’s glossary series to break all the prerequisites to find out if you’re buying a new or used car from a dealership.
So you have leased a car and it is not working. Maybe your finances have changed. Maybe you hate cars. Maybe you leased it when you were unmarried and now you’re married, have a baby on the way, and a Miata isn’t going to get the job done.
Because whatever it is, being stuck on that three-year lease is suddenly a burden.
Can You End Your Lease?
The most obvious option is terrible. You can end your lease as soon as the leasing company pays you all the remaining payments and an initial closing fee that costs hundreds of dollars. This is likely to be a good move for you, financially, thin.
Another, much tastier option, is finding another person to take your lease. This is called lease trading and there are several websites like Swapalease.com that can connect you with people who no longer want or need a car, then help them with the process of transferring the lease.
Why would you swap leases with someone?
There are many perfectly good, valid reasons Having a short lease can be interesting for any reason. The lease agreement you received may be better than what is currently on offer. The car you have can no longer be sold. They may want to avoid a down payment or they may be in the same predicament of lifestyle change as you. Because whatever it is, it’s not that weird.
What will happen then? The lease-trading website can assist in most areas of the system, including obtaining a credit report from the buyer, a vehicle history report for your vehicle, and a vehicle inspection system. This will most critically determine whether it is possible to transfer your lease. Most leases can be transferred, but not all, and for some that may require you to stay in the lease agreement. That means if your leaseholder fails to pay them, you can still be the hook for them. This is an unlikely scenario, however.
In terms of costs, the person who leases you pays the leasing website fees and the lion’s share of the costs in general. These should still be less than a normal down payment. Depending on your state, you may have to pay a fee related to licensing or registration, but these are usually not difficult. So, if you want to get out of your lease, then lease-trading is definitely the most promising way.
Is there another option?
The final option is theoretically the best, but it requires a perfect storm of circumstances to take advantage of. If you have been in your lease for one or two years, chances are that the amount you owe is actually less than the value of the car. Basically, when you lease a car, the leasing company underestimates the remaining value of your car (purchase amount). It gives you equity, house money to talk about, which allows you to use it as a down-payment for a new car that you effectively trade for a new car.
Of course, this predicts your current car is in excellent condition and with fewer miles. It also helps to trade your car for another of the same brand, but not entirely necessary. That equity still applies.
So, although we would definitely recommend researching the current price of your car and then comparing it to your purchase price, we will not rely on it. The remaining values are quite accurate, and it usually changes the market in the middle of your lease to make this perfect view possible. In other words, lease trading is still your most likely option to get out of a lease early and avoid a hefty initial closing fee.