A common myth of leasing is that, once you sign a contract, you are committed to the vehicle until the terms of the contract are completed.
The truth is, you can turn in a leased vehicle early. You can also trade the vehicle, sometimes also called a lease-buyout and sale.
Is it better to fulfill the terms of your lease contract? Yes. But sometimes circumstances change. Jobs change. Family situations change. And sometimes vehicles need to change, too.
Let’s say your spouse and you just found out you’re expecting – twins! Great news, right? Except the two-seater convertible that you leased six months ago that, at the time, seemed just perfect for the two of you isn’t going to work for one car seat, let alone two.
Or maybe you just received an offer for your dream job – in London. You have one year left on your three-year lease. What do you do?
Review your contract and understand your options
The first step is to review your contract and understand your options.
Is there an early termination clause? If there is, what are the terms? More than likely, there will be early termination fees along with the remainder of the payments. Depending on the amount and your reason(s) for wanting to terminate, it might be worth it to pay to get out of the lease.
Ensure you have a clear understanding of your vehicle’s value
Second, you will need a clear understanding of your vehicle’s value. Sometimes, rather than terminating a lease, you will save by buying out the lease and then selling or trading the vehicle, but that depends on the current market value and how much you still owe on your lease. If you’re unsure about how to calculate this or what the current market value of your vehicle might be, contact your originating dealer for assistance.
Both instances are not unlike paying negative equity when selling a vehicle that is financed – if you owe more than the vehicle is selling for, you are responsible for paying the difference. Likewise, whether terminating a lease or completing a buyout/sell, you’re responsible for either the remainder of the lease or the difference between the buyout and the selling price.
Contact your originating dealer
Finally, as mentioned above, contact your originating dealer. We all understand that the unexpected happens. Start by explaining your situation and ask what, if anything, they can do to assist. They can walk you through your options and help you determine which avenue is best for you and your situation.