In recent years, it has become quite common for people to lease vehicles, rather than to take the more conventional path of financing a vehicle purchase through an installment loan. While there may be many good reasons for leasing rather than buying a vehicle, there may come a time when you want or need to terminate the lease early. Fortunately, you have a number of options available to you in order to terminate your lease early. The best option for you will depend on the facts of your situation, and your goals in wishing to terminate your lease early.
If you are leasing a vehicle, you do have the option of seeking alternative financing in order to buy the vehicle that you have been leasing through what is called a vehicle lease buyout. You can buyout a vehicle at the end of your lease term, and since a buyout is based on the current value of the vehicle, which is now a “used” vehicle, you may be able to negotiate a lower payment and better terms under this method of financing.
You also can opt to buyout a vehicle before your lease term has expired. This option is a bit more complicated, but it essentially permits you to convert your lease to a purchase contract. The potential downside to an early lease buyout is that the purchase agreement must take into account not only the current value of the vehicle, but also the amounts that you still owe under the lease term. Therefore, this may not be as attractive as an option for you as a buyout at the end of the lease term.
While it is possible to trade in a vehicle that you have been leasing, you need to be very cautious about fees and penalties that you might be liable for if you choose to do so. A dealer might offer you some sort of incentive or “deal” in order to trade in your leased vehicle. However, be sure that you consider the new lease terms completely and carefully, and compare them to your existing terms. If you don’t, you risk taking on a new lease that will end up costing you more than you expected in the long run.
For instance, you will need to look closely at your existing lease to see if you would be subject to any early payoff or termination penalties, as well as other fees related to mileage allowances or the condition of the vehicle. Even if the dealer offers to just roll such fees into your new lease, keep in mind that you will now be paying not only the extra fees, but interest on those fees, as well, which means that you will pay more. Likewise, if you owe more money on your current lease than what the vehicle is worth, then you may end up with a much higher lease payment, since you will have to not only pay the lease payment for the newly leased vehicle, but also the remaining amount owed under the old lease.