Lease, Release Me

By Chelle Cordero

October 3, 2014 5 min read

If you like driving a new car every few years, having a low monthly payment and not having the hassle of selling your old vehicle, then maybe leasing a vehicle is for you. However, there are a few things to consider, such as mileage, wear and tear on the car, and not being able to personalize even the wheels. Still, the strongest draw is having a brand-new car and not having to pay the full retail price; you pay only for the time you use it. Sounds like an appealing and yet hefty decision.

You can avoid many of the pitfalls of making the wrong decision by reading the contract completely, noting the mileage limitations, whether the leasing company allows early buyouts and/or lease transfers, and any early payment fees or time restrictions on transfers. It's a good idea to know what your typical yearly mileage is and negotiate any necessary extra miles at a reduced price. If you return the lease with more mileage than you contracted for, you will pay an estimated two to three times the amount per mile than you would if you bought them at the beginning. Be sure to know what is considered "normal wear and tear" and what fees may be charged for "damage" to the vehicle. Double check the vehicle's residual value: the expected amount of depreciation during the term of the lease.

Typically, your personal auto insurance will cover the vehicle in the event of theft or collision; however, any payouts by the insurance company typically go to the lease company (as owners). GAP insurance is recommended to cover any difference between the insurance company's payout and the value of the car to the lease company (including remaining payments). GAP insurance may be included in the lease agreement or offered separately by the lease company. Negotiating a lower down payment will raise your monthly payments, but will also lower the money invested (which you will not recoup) if something happens to the vehicle early in the lease agreement.

So what happens when you've made all of your plans and then life changes? Are you stuck in a contract for a vehicle that now doesn't meet your needs or that you can't afford? The short answer is yes. You signed a legal contract, and you are responsible for the financial commitment, but there are options. No matter which option you choose, there are expenses, but they are considerably less than the penalties that can be imposed and the irreparable damage to your credit if you just try to walk away.

The least expensive option is a lease assumption, if your contract permits it. Contact an online lease transfer service such as or They can walk you through all of the steps and make sure everything is signed, sealed and delivered with no repercussions. The transfer company will match you and your lease agreement with buyers who can assume the remaining payments. Many buyers want the benefits of a new car lease without the lengthy commitment or initial down payment. You may still be held responsible if the new lease owner defaults or otherwise damages the vehicle, so verify your protections with the lease transfer company. There are costs for which you will be responsible, but they are considerably less than early termination fees.

Another option is to pay off the lease early and return the car, but this is usually very expensive. Still another option is to pay off early, buy the car outright and sell it. It's risky, but it's also a way to recoup some of your investment -- and early termination fees will still apply. You could also trade in your car and then lease or finance the purchase of a new car -- if the car is worth more than you owe, this might be an equitable solution. Finally, you could call the lease company and ask for your early payoff amount, and then let them sell the car at auction. But you are responsible for the difference between what you owe and the actual realized value (what the lease company gets from the auction sale).

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