Want To Get Out Of Your Lease Early? Here’s How!

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When it comes to getting behind the wheel of a new ride, many opting for leasing. Despite the fact that you don’t own the vehicle, you have a lot of flexibility when it comes to upgrading. In fact, a majority of people choose to lease simply because they want to have the latest car at all times. Leases also tend to cost less (depending on the term and type of car) – another reason many opt for them. While leasing a vehicle does provide great benefits and is a viable option for those who don’t want to fully commit to a vehicle, there may come a time where you want to get out of your lease. This could be because you want to purchase and own a vehicle, you are not satisfied with the make and/or model, or you are unable to make payments. Terminating a lease early can be a costly action, so much so, that keeping your lease until it is up may be the best option. With that being said, if you are looking to terminate your lease without paying an arm and a leg, there are options available. Here’s how to get out of a car lease early in Canada without spending a fortune:  

Transfer your lease to someone else

With all the e-commerce sites out there, selling products has never been easier. Vehicles are always in high demand and many turn to online sites to browse potential options. If you want out of your lease early, transferring your lease is the most cost-efficient option available. How does this work? Talk to your dealer and request a transfer of the lease. The person you are transferring too will officially take over any payments for the remaining term of the vehicle.  It is important to note that in some instances, your name may still be on the contract, ergo, should the person of transfer miss payments, you could be held accountable. It’s important to ensure the person taking over the lease is committed to paying in a timely manner. There is also a transfer fee associated with this process, typically ranging between $50-$500, albeit, still cheaper than terminating your lease without transferring it.  

Buy out the vehicle

When it comes to a lease, there are quite a few restrictions. Typically, leased vehicles cap at 20,000-24,000km a year with hefty costs added for additional kilometres. Because the vehicle isn’t yours and you eventually have to return it, you may find yourself feeling uncomfortable or unable to fully appreciate the vehicle. If you are looking to break free of any restrictions, own the vehicle, and finances aren’t an issue, buying the car out may be your best bet.  If you want to break out of your lease, the dealership may offer you incentives when it comes to buying out the vehicle (after all, they are making a sale). Unlike a lease, you aren’t paying for the depreciation value, but rather, the full value of the vehicle. For example, if a vehicle is $20,000, your total lease term will not equal that amount – only the amount that particular vehicle depreciates over your term. When you finance, however, you are paying the total cost of the vehicle, in this case, $20,000, over the span of your term. It’s important to discuss this option with your dealer and see what offers and incentives are available to you should you make the switch.   

Don’t be afraid to ask for help

Sometimes, we are put in situations that are less than ideal. Some situations can impact our financial state and vastly affect our ability to make payments on time. When this occurs, many jump to terminating as many monthly payments as possible, including a vehicle lease. Prior to completing a costly termination, talk to your leasing company and explain your situation. They may be able to lower your monthly payment or even suspend it for a period of time.  Your leasing company may opt to lower your monthly payment if your payments have been in good standing prior to. If you have been up to date with payments and proven that you were able to financially afford your lease, your chances of them lower your monthly payments increase. When it comes to the temporary suspension of payments, it’s important to know that this isn’t a free pass for that period. The total amount of payments incurred within the suspension period will be added back onto your lease when the period is over. You will have to make up for these payments, typically monthly. This means your monthly payments thereafter may go up, however, it’s a viable option if you feel your financial state will only be negatively impacted for a short period of time.   

What NOT to do when terminating a lease early

With every good option, comes a bad one. Despite the fact that there are plenty of available options to safely terminate a lease, there are some that could cost you a significant amount of money or land you in some hot water.

Returning the vehicle

While this isn’t a particularly bad option, it is costly. Opting to return the vehicle before your lease term is up comes with some hefty payments including a termination fee and the remaining depreciation value. This amount typically resides in the thousands. While it will rid you of the contract, you will still be stuck with a large bill at the end. 

Avoiding future payments

This is the cream of the crop when it comes to bad options and should be avoided at all costs. Ceasing payments can have a detrimental impact on your credit and overall financial state. This is typically referred to as defaulting on the payments. This can be done by cancelling the card utilized to pay the lease or not having sufficient funds to pay on a consistent basis. Not only can this option put a huge toll on your credit and financial state, but it can also be grounds for legal action. Leasing companies have the option to sue should you be in arrears with payments. It’s best to avoid this at all costs and opt for an option that won’t put you in a sticky situation down the road.    Terminating a lease early may be done for a variety of reasons, but before you go through the expensive process of doing so, make sure you weigh out your options. Doing so can help you avoid hefty fines and lump-sum payments. Looking to make the switch from leasing to owning? Our Dealer Invoice Report can save you some serious money on your next purchase – no hefty fees here!

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