How to Get Out of a Car Lease

Written By
Julija A.
July 07,2023

Leasing a car can have a number of benefits, but at one point, it might not make sense for you anymore. Your car lease may no longer be what you want, but the lease has yet to run out. When you're in this situation, you might begin to wonder how to get out of a car lease and whether it's even possible.

Fortunately, you do have some options if you want to be released from your car lease so that you can relieve yourself of the financial obligation. It can be a tricky and sometimes expensive process, but there are ways to make it easier.

So, how to get out of a car lease early? This guide will take you through some of the options you might want to consider.

How Car Lease Contracts Work

Like any other contract, signing a car lease contract means that you're agreeing to the terms set out within it. In the case of a car lease, you're agreeing to lease the car for a certain period and to make a set number of payments. Unlike some other contract types, there is no cooling-off period for a car leasing contract.

As soon as you have signed the contract, the lease begins and you can't easily back out of it or return the car. However, that doesn't mean that there is no way out of it. There are several options that may allow you to return a lease car early or get out of your lease entirely, even if the contract isn't up yet.

Terminating a Car Lease

Your first option for dealing with a car lease that you no longer want is to officially terminate it with the leasing company. It can be costly to break the lease, but it could still end up being the best decision if keeping the lease would cost even more over time.

You might find yourself having to pay an early termination fee when breaking a car lease. Additionally, you could lose money if there is negative equity between the value of the car and the amount left on the lease. You might also have to cover the remaining payments on the lease, and you may be responsible for other fees, too.

Before you decide if this is the best choice, you need to calculate what breaking the lease will cost you.

If you do decide you still want to go with early lease termination, first get in touch with your leasing provider. They can help you by discussing your available options and making sure that you're aware of all of the costs involved in returning a lease car early.

They should let you know what their rules are and what you’ll need to do to return your car early.

If you have only just signed the paperwork and it has not yet been processed, you might be able to stop the lease from being put into place. Contact the manager of the dealership as soon as you can and explain the situation.

They might be willing to allow you to go back on your decision. This will likely be easier at dealerships that provide in-house financing.

Alternatives to a Standard Lease Termination

If you don't think that breaking the lease in the usual way is the best way to get out of it, there are alternatives that you can explore. Transferring or swapping the lease are popular options, and there are other ways to avoid early exit fees, too.

Transferring or Swapping Your Car Lease

Transferring or swapping your car lease is one possibility if you want to avoid the large penalties that can come with an early car lease termination. Transferring your lease is the process of putting your lease in someone else's name so that they can take over the car and the payments, and you are no longer responsible for it. The other person buys you out of your lease, taking it on so that from now they are the ones who will be leasing the car.

One thing to keep in mind for this method is that not all leasing companies will allow it. The majority of them will permit the transfer of a lease from one person, though. You can check your leasing agreement or, if you're not sure what it says, call the leasing company and ask them to clarify the rules for you.

You might already know someone who is willing to take on your lease. If you have already asked your friends and family, consider using lease swapping websites such as LeaseTrader or Swapalease. These will match you up with people who want to buy a lease.

They benefit from taking over your lease because they can do so without having to put any money down, plus they can benefit from a shorter lease term, which means they save money.

Trade in the Car

If you’re still wondering how to get out of a car lease early, trading in your leased car is another good option. This could be a good choice if you still need a car but want a different one. However, this option means that you still need to pay early termination fees for your lease.

You have the advantage of the costs being included in your future payments, which can somewhat reduce the financial burden. While it won't save you money, it can make the costs of terminating your lease early more manageable.

Buy the Car (and Sell It On)

Purchasing the car is also one of the ways a person can get out of a car lease. Of course, a buyout means that you need to have the cash to purchase it upfront. However, if you are already part of the way through the lease, it might not be too much to pay off the rest.

Perhaps more importantly, buying the car will allow you to sell it to someone else, so even a short-term loan may be worth considering. You can recoup your money and maybe even make a profit by selling the car.

Start by checking your lease payment schedule to see how much it will cost to buy the car. If you want to cover your costs, you'll need someone willing to buy the vehicle for at least that amount. However, you might also be willing to accept a small loss if it means that you don't have to keep paying the lease payments.

Your car could be bought by a dealership, a friend or family member, or any private person who you can find who would be willing to buy it.

Before deciding whether to buy and sell the car, it's a good idea to check the current market value. Look online for examples of cars similar to yours (not just make and model but also age, mileage, etc.) and find out how much they typically sell for.

Another important thing to check is whether you will have to pay any capital gains tax. This will also affect the amount of money you could stand to make.

Change the Lease

If it turns out that getting out of your lease isn't the best decision for you, an alternative could be to restructure the lease. Changing the payments so that they are more manageable can help you if you are finding it hard to keep up with them. You might also be allowed to suspend your payments for a while, which could be a good idea if you know that you're about to become more financially stable.

Of course, this doesn't get rid of the lease, and you'll still be on the hook for the cost of it. However, it's something that some lenders will do because they would prefer to have some money from you than no money at all.

Your lease provider is obligated to give you a lease restructure, but many of them will. In fact, they often have assistance in place for people who are experiencing financial hardship. This is beneficial for them because it helps to ensure that their customers still pay what they owe, even if it might take a little longer than expected.

You can speak to them and ask about how they might be able to restructure your lease, perhaps by reducing the monthly payments and extending the length of the lease.

Gap Insurance

In some cases, you might benefit from having gap insurance to cover the costs of getting out of a lease. This option is offered by some leasing companies to cover you in the event of your car being stolen or totaled. It can reduce or get rid of the early termination fees in these circumstances and might be one of two types of car insurance that will cover some or all of your costs.

It will only help to protect you in some situations, so it's not something you can rely on if you simply want to end your lease early.

Vehicle Recall

If your vehicle is recalled for repairs, this can be a situation where you are allowed to exit your lease early. However, it's not the case for all lease contracts, so it's essential to double-check it before counting on this option.

If there isn't a recall provision in your contract, the dealership will usually provide you with a rental car that you can drive until the vehicle you are leasing has been repaired.

Fraudulent Leases

It's always crucial to be on the lookout for fraud and scams when making big purchases. A fraudulent lease could catch you out, but it could also give you the chance to escape from it. For example, someone could have tampered with the car's mileage to make it appear as if it has been used less than it has. This is illegal and is grounds for you to cancel the lease for the car.

Some dealers might misrepresent the lease or mislead you in other ways, leading to you ending the lease. If the dealer refuses to terminate the lease when you believe they should, you might need to get legal help from an attorney.


How can you get out of a car lease without penalty?


To get out of a car lease without termination penalties, avoid choosing a standard cancellation. Instead, consider one of the alternative options, such as transferring your lease to someone else, trading in the vehicle, or buying the car from the leasing company.

Can you back out of a car lease?


Car leases don't have a cooling-off period like many other contracts in consumer law. The lease is final, and you don't have a short period during which you can take back your decision. However, there might be ways for you to get out of your lease, such as transferring it to someone else.

How much does it cost to get out of a car lease?


The cost to get out of a car lease will depend on several factors. If you want your lender to release you from the contract, many leasing companies will expect you to pay the full cost of the remaining payments. There can be other fees, including early termination fees, deal fees, transfer fees and taxes, and possibly even car storage fees.

What can I do if I hate my leased car?


You have several options if you don't like the car you have leased. You might be able to trade it in for another vehicle, buy it and sell it to someone else, transfer the lease, or end the lease early. Read our article above for detailed instructions on how to get out of a car lease you no longer want.

About author

Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.

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