How to Break Your Car Lease Without a Penalty

Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest.

Hans Jasperson has over a decade of experience in public policy research, with an emphasis on workforce development, education, and economic justice. His research has been shared with members of the U.S. Congress, federal agencies, and policymakers in several states.

Leasing a vehicle is a great way to have the privileges of driving a nice car without the hassle of long-term maintenance or finding a buyer when you're done with it. It’s also nice because you know exactly how long you’ll be bound to the vehicle you’re driving.

But what if you’re itching to get rid of your vehicle before the lease is up? Or you have to move across the world and can’t take your vehicle with you?

Well, don’t drive it back to the lot just yet. If you return the vehicle early, you may have to pay some hefty penalties, even up to the remaining balance on the lease. But don’t despair just yet—there are indeed ways to get out of your lease without paying an arm and a leg.

Read Your Agreement Carefully

Even though you hopefully already did this when you first signed the lease, it’s a good idea to reread it with this in mind. Is there anything here that penalizes you for ending the contract early?

In the vast majority of cases, there will be. But you should also look for any exceptions or situations in which you can avoid these penalties.

Try to Find Someone to Take Over Your Lease

It’s not a perfect solution, and you can’t pick just anyone off the street. Some dealers won’t let you swap leases at all. Many have several restrictions concerning the type of person who can take on your lease and when they can do so. But many companies do allow a lease transfer for a fee much smaller than the typical price of continuing the lease.

Several sites function essentially as dating sites for cars—people with leases looking to unload post their offers, and folks looking to take over a lease respond to the ones that grab their interest. Asking your friends and family members if they or anyone they know is interested is also a good idea.

Note

If you want to find someone to take over your lease, know that they will still have to have good credit and be approved by the company. Some dealers, unfortunately, will also still hold you accountable if any damage is done to the vehicle.

Trade It for Another Vehicle

This is not a good idea if you need to end your lease because you are leaving the country or are in financial trouble. But if you simply want to drive another type of vehicle, you can certainly change over to a different one. You’ll may have to pay early exit fees, but you won’t usually be on the hook for the rest of the payments in your current lease. Also, switching to a less expensive model might save you in monthly payments—or at least it doesn’t hurt to ask.

Take the Early Buyout Option

Part of the appeal of a lease is that if you decide at any time that you want to purchase the vehicle you’re driving instead of just making monthly payments on it, you have the option of doing so through the early buyout mechanism, by which the company will calculate the approximate value of the vehicle you’re driving as well as how much you’ve already paid into the lease. If you’re feeling ambitious, and you have the cash, it might be worth your time to buy the car from the lessor and try to sell it.

Note

Once you buy the car, you can try to sell it to a dealership (this is only worth it if you paid less than the Kelley Bluebook price for it) or to a friend or family member—or someone you meet through Craigslist. Even if you lose money, you may lose less than you would have if you'd paid out the rest of the lease and penalties.

Or. Just Wait It Out

This may be obvious, but you don’t have to make use of the vehicle every day that you have it out on a lease. If you simply are hoping to terminate your lease a few months early because you are moving to a different state, try leaving the vehicle with a friend (of course, they can’t drive it!) and just returning it when the lease is up. Especially if you only have a few months left on your lease, this may be the most affordable option.

In the vast majority of cases, it’s only worth it to break your lease if you have a serious, unavoidable reason for doing so. But if that’s not the case, then you are probably going to be better off driving the vehicle you signed up for until the contract is over. It might not be the hot rod of your dreams or the absolute best car for your situation, but the cost or hassle of trying to cut out early may not be worth it.

Frequently Asked Questions (FAQs)

How much does it cost to return a leased car early?

When you terminate a lease early, you'll be responsible for paying the early termination charges. These charges are the difference between how much is left on the lease and how much the car is actually worth. For example, if you still owe $18,000, and the car's realized value is $15,000, then you will owe $3,000.

Does breaking your car lease early affect your credit?

Yes and no. If you are unable to make your car lease payments or stop making them, then it will negatively impact your credit score. If you are able to transfer the lease to someone else, then breaking the car lease early won't impact your credit at all.