Do I Get Penalized for Turning in My Auto Lease Early?

At first look, an auto lease may seem like a beneficial deal, but a situation might arise wherein you want to return the vehicle before it is due back to the dealer. If you decide to turn in your lease early, first figure out whether, and how, the leasing company may penalize you. In some cases you may find that it is wiser to simply continue with the lease until it expires.

Auto Leases

Financial experts like Liz Pulliam Weston advise consumers to purchase used cars and keep them for at least 10 years. But some buyers still prefer to lease brand-new cars for a short period of time, for one or more reasons. For one, leases often offer lower payments compared to buying. Since it is a new car, the consumer's risk of experiencing issues with the car is minimal. Finally, the ability to change cars every few years attracts some consumers.

Penalties

When a financing company leases a car, the company intends for you to continue paying until the end date. If you decide to terminate ahead of time and bring the car back to the dealership, the financing company will try to recoup the potential losses by charging expensive penalty fees.

Other Concerns

In addition to penalty fees, you may also have to pay fees for any damage to the car when you return it early. You can also get any damage to the car fixed on your own before you return it, as long as you bring the car back to an acceptable condition. You may also have to pay for going over the allotted mileage. So if your lease is set for 36 months at 15,000 miles per year and you bring the card back early after 24 months with 40,000 miles, the financing company may charge for the extra 10,000 miles on the car. The financing company prints all of these details on your lease, including the rates. These costs can add up, so before you attempt to bring a car back early, make sure you read the lease and come to a realistic estimate.

Alternative

Instead of bringing the car back to the dealership, you also have the option to try a lease transfer. To perform a lease transfer, you must find a willing person who wants to take over the lease and get approval from the financing company to do so. Some online services help facilitate this transaction for a fee.