Tips for Negotiationg Your Early Lease Termination

So, you decided to lease a car a while ago but circumstances changed and now you're wondering if it's possible to terminate the lease. The good news is that it's possible, but you have to know the consequences beforehand in order to take the best course of action. Armed with the right information you can end your lease early and avoid costly penalties.

Usually, when one wants to end their lease early the reason is either a change in financial status or lifestyle. Here are a few examples:
  • Changed vehicle needs - maybe your family just got bigger and you need the right vehicle to accommodate the change. The opposite can also be true - your kids left home and what you need now is a small, gas-sipping car.

  • Need to drive more miles - you landed a better job but it's further away and you have to drive more and exceeding the mileage limit and paying for extra fees doesn't make financial sense. 

  • Improved financial situation - that new job pays considerably more and you can finally afford the car you have always wanted. 

  • Location change - you moved to the city from the suburbs where everything you need is within walking distance and you no longer need a car. 

  • Simply changed your mind - at the time you thought the car you've been leasing was the perfect vehicle for you but a year in, you no longer feel the same way.
The point is, no matter what your reason is for wanting to get out of your lease, you just have to know what you're up against.

Penalties for early lease termination

You have to re-read your lease contract to find out what they are (keep in mind that they vary from one company to the next). Generally speaking, early termination penalties can include:
  • Paying the remaining payments on the lease
  • Early termination fee
  • Fees meant to cover dealers cost for preparing the vehicle for sale
  • Fees for storage and/or transportation of the car
  • Negative equity between the current value of the car and your lease amount
Ways to avoid penalties

Paying fees to break out of your current lease is inevitable but there are things that could be done to minimize that amount.

  • Return the vehicle - this option should be your last resort, as it will cost you the most. Know that if you don't plan on leasing another vehicle and just want to return the one you have you'll have to pay most if not all of the penalties listed above.

  • Trade-in for another vehicle - in that case, discuss with your dealer the option for rolling your lease into the new lease or purchase of another vehicle. There are dealers that actually encourage early returns without penalties as long as you lease another vehicle from them. 

  • Lease transfer - it only works in states that allow it and dealerships that permit it. You can transfer the lease to an individual buyer you have found yourself or use a lease swap company. If you choose the latter, expect to pay that company a commission as well as a bank fee for processing the paperwork. One thing to remember is that some financial institutions will only allow the lease transfer if your name is on the new contract, too. They do it to protect themselves in case the new leaser defaults. If that happens you will have to resume making payments. 

  • Purchase the vehicle - that's a good option if you like the car and have to drive more miles but don't want to pay extra for that. In this case contact the dealer and discuss purchasing the car before the end of the lease. 

  • Sell the car - yes, you can do that as well. If you want to avoid paying mileage or wear and tear fees at the end of your lease that's a great option. One thing to keep in mind is that depending on your vehicle payoff, you might incur a loss when selling.

>> Next, check out our Special BMW Lease Offers and if you have additional questions - call our finance department at (570) 338-6955 <<


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