Car leases can cause headaches if you want to prematurely end your lease– unless you can arrange to swap a lease. Though the practice isn’t usually advertised by car dealerships, most contracts do allow you to get out of your lease early, provided you can find someone to take it over for the rest of the term. This can save you hundreds of dollars in early termination fees, not to mention actual lease payments. If you’ve got your eye on another vehicle, or simply can’t afford the additional expense, here’s how to get out of a car lease.
What is a Lease?
Leasing is almost always more expensive than buying. However, if you prefer to have up-to-date technology, and would like to drive a near car every few years, leasing might be for you. In a lease, you agree to give your auto dealership a monthly payment for temporary use of one of their cars. The payment will vary, depending on the car, but many lease terms are around 36 months. The lease agreement will also stipulate:
- The Down Payment. Try to negotiate a $0 down payment, if possible. This will raise your monthly payments, but will give you less to lose if you might want to break the lease later on.
- The Yearly Mileage Limits. Most leases only allow you to drive the car for a specified number of miles each year, often between 10,000 and 15,000. Go over, and you’ll face a per-mile charge.
- GAP Insurance. GAP insurance protects drivers in the event that they total a car when it’s worth less than they owe on it. This is typically the case for the first few years of a car’s existence, so almost all leased vehicles should have it. Often, the lease agreement even requires it. If possible, buy your policy through your insurance company, rather than the dealer, as it’ll be less expensive.
- Other Fees. Your contract may include a number of other fees, including the cost to terminate your lease early, and the amount you’ll be charged for any damage, beyond normal wear and tear, when you return the vehicle.
The agreement should also specify whether you’re allowed to swap the lease with another driver, should you want out before the lease period ends.
How Can You Swap a Lease?
If your contract allows it, swapping is actually fairly simple. The most important part is finding a trustworthy person to take over your lease. Maybe you have a friend or family member who’s admired your car. Otherwise, there are numerous lease trader resources, both in print – in trade magazines and newspapers – and online.
Once you’ve found an interested person, discuss it with your dealership. The person assuming your lease may have to undergo a credit check, but if they pass, you’ll be in the clear once they sign the papers. You may also owe a few administrative fees, but nothing like an early termination fee.
Why Would You Swap a Lease?
If you’re currently on a lease, and looking to swap, there are a number of reasons you might be interested. Maybe your financial circumstances have changed, and your lease is no longer affordable. Maybe there’s another car you’d rather buy, or maybe you just want to lease something newer. A swap presents some obvious advantages: You’ll save money by avoiding further lease payments, as well as termination fees.
There are also advantages for the person taking over your lease. They’ll be subject to a shorter term contract, which some drivers might prefer, and they won’t have to worry about a down payment, or any other costs involved with arranging the lease in the first place. If you’re feeling generous – or desperate – they might also get a financial incentive, for example, a few months without payments.
Although swapping a lease can be convenient, it’s not without risks for both parties. If you’re bailing on the lease, be absolutely sure you’re in the clear if the person taking over the lease stops paying, to avoid damage to your credit. If you’re assuming a lease, make sure the car is in good condition when you take it over. Otherwise, you might have to pay for damage done to the car by previous lessees when you turn it in. Be sure you’re also aware of how many miles are left on the lease, and other conditions discussed in the original contract. As long as you’re both protected, however, a lease swap can benefit both parties financially.