Returning a Leased Car Before the Lease Ends

When you sign an auto lease, you agree to make payments according to a set schedule until the end of the term. If you are not able to continue making your car payments until the end of the lease, you have several options to terminate the contract early. The cost of termination depends on the option you choose. Whichever decision you make, be sure the car is clean and well-maintained when you return it to the dealer to avoid additional charges.

Your first option is to return the car to the dealership before the end of the lease and request early termination of your contract. The cost of choosing this option depends on the terms of your lease. It may be your most expensive choice because of high early termination fees. Some dealers also will charge you for the outstanding payments remaining on the lease.

Trading in the vehicle for a new one also is more expensive than simply finishing out the lease, but provides you with a way of recovering some of your costs while still having a car to drive. You must take out a new lease with the same dealer to qualify for termination of the original lease. The early termination fees and penalties roll over into the new lease, so your monthly payments could be higher than before the trade-in. This spreads out your fees over the entire term of the lease to make it easier for you to afford.

If you can find a different dealer willing to purchase the car, you can sell it and pay the buyout clause on your original lease. Negotiate with the second dealer as if you have already purchased the car outright. You will be looking for a sale price that is at least as high as the amount of the buyout. This may not be possible if your buyout is too high or the value of the car is low. Shop around to several dealerships to get the best possible deal.

Instead of returning the car, you may be able to talk to the dealer and negotiate lower payments on your existing lease. This may require an extension of the lease term in exchange for the reduced payments. You also may be able to pass your lease onto someone else if you cannot find an economical way to return the car to the dealer. However, you may have a hard time finding a willing buyer if the terms of your lease are unfavorable or the car's value has dropped significantly. You also will still be responsible if the new owner defaults on his payments.