How to Return a Leased Car Early for Financial Reasons

Returning a leased car early can be a good option if your financial situation changes and you can no longer afford the monthly payments. However, there are usually penalties for ending your lease agreement early, so you’ll want to understand your options before making a decision.

Here’s what you need to know about returning a leased car early for financial reasons:

Review Your Lease Agreement

The first thing to do is thoroughly review your lease agreement. There may be clauses that allow you to return the vehicle early without penalty under certain circumstances, like if you lose your job or have to relocate. Your agreement should spell out the terms and conditions for early termination.

Also look for details on early termination fees. Most leases charge around $300-$400 plus remaining monthly payments. There may also be excess mileage fees and disposition fees. Know what you’ll owe so you can prepare.

Talk to the Lessor

Next, reach out to the leasing company or dealership to discuss your situation. Explain why you need to end your lease early and ask if they’re willing to waive any penalties. They likely won’t, but it doesn’t hurt to ask.

You can also negotiate to see if they’ll reduce the early termination fees. If you’ve been a good customer who always made timely payments, they may be willing to work with you.

Consider a Lease Takeover

With a lease takeover, you find someone to assume the remaining payments on your lease. This transfers the lease to them and releases you from the contract. The new lessee must be approved by the leasing company.

Lease takeovers can be arranged independently or through third-party services like SwapALease.com. There are usually transfer fees, but it’s often cheaper than early termination fees.

Buy Out the Lease

You may have the option to buy out your lease, which involves paying the residual value of the vehicle stated in your contract. This allows you to keep the car. Carefully compare the buyout amount to the car’s market value before deciding.

Buying out the lease terminates the contract, so you’ll own the car free and clear. Just be sure you can afford the lump sum payment.

Voluntary Repossession

With voluntary repossession (also called voluntary surrender), you return the vehicle to the lessor. They’ll sell it and you’ll owe the difference between the sale price and remaining lease balance. This should be a last resort since it damages your credit.

Consider All Costs

Before returning your leased car, tally up all fees – early termination, disposition, excess wear and use, remaining monthly payments, etc. This gives you the true cost of breaking your lease. Determine if it’s worth it or more affordable to keep the vehicle.

Also factor in costs to buy a replacement car if you return the lease. You may end up spending more in the long run.

Explore Alternatives

Look into alternatives before returning the car, like:

• Refinancing your lease with lower payments
• Using lease cash-out offers from the dealer to lower payments
• Subleasing the car through a third-party platform
• Taking out a personal loan to cover remaining lease payments

These options let you keep the car while reducing your payments. Crunch the numbers to see if they make sense for your situation.

Be Prepared for Credit Impacts

Returning a leased car early can negatively impact your credit, especially if the lessor must repossess the vehicle. Missed payments, collection accounts, and repossession all cause your credit score to drop.

The impact is temporary as long as you make payments on time going forward. But it’s something to be aware of.

Have a Backup Plan

Don’t return your leased car until you have transportation lined up. Shop for a cheap used car you can buy with cash, or use public transportation temporarily. You don’t want to be stuck without a vehicle.

Returning a leased car early for financial reasons takes some planning. But in some cases, it’s the right choice to avoid being overwhelmed with payments you can no longer afford. Review all your options and the potential costs before making a decision.