avoiding the pitfalls of lease termination
Traditionally terminating a lease refers to cancelling one’s lease contract early and following the provisions laid out in the original lease agreement. Often terminating a lease prior to the end of term meant that the lessee would be responsible for several potentially significant costs including the following:
1. Any and all remaining lease payments
2. An early lease termination fee or penalty
3. Costs associated with both mileage overage and/or wear and tear issues
As you can see terminating a lease early can be cost prohibitive as a result of the potential outstanding payments and the possibility of the fees associated with doing so. It should also be noted that it is going to cost far more the earlier a lessee opts to ,terminate their lease primarily as a result of fewer payments already being made.
Depending on the situation and the timing that a lessee decides that an early termination is their best course of action it may make sense to also consider exiting a lease through a sale. In this scenario the lessee would need to determine the current buyout on their lease often with the help of a dealership. Regardless, the lease buyout figure will ultimately come from the leasing company who holds the lease and subsequently the company where the lessee sends their monthly lease payments.
Similar to terminating a lease early directly with the leasing company selling a lease outright can prove to be an expensive endeavor for the lessee, as well. In large part this is the result of many of the same factors being involved to do so. Additionally, the market value of a vehicle must be evaluated which may help or hurt depending on not only the present economic conditions, but also the actual vehicle in question. If a particular vehicle is in short supply and high demand this may equate to the lessee being able to exit relatively pain free from an economic perspective. However, vehicles that meet these criteria are few and far between and a buyer would still need to be located.
The most optimal way to effectively terminate a lease early is to take advantage of a lease transfer provision which is permitted by most leasing companies. In this case a lessee simply transfers the lease to another credit worthy individual who picks up the lease from where the original lessee leaves off. Of course this requires locating someone interested in taking over the lease which may seem difficult at first glance. However, many automotive consumers find taking over a lease an attractive option for obtaining their next vehicle.
Automotive consumers often find the shorter terms associating with taking over a lease to be attractive. When this is coupled with the fact that many lease payments were originally subsidized through down payments and/or trade-ins the idea becomes even more compelling. Swapalease.com is an online marketplace where lease sellers and buyers meet to transfer leases. Swapalease.com is an excellent resource to learn more about transferring your lease and the specific policies of one’s leasing company when doing so, as well.