Ending a Automobile Lease Early
There are various options for early lease termination as listed below.
1. Turning-in the auto lease
The simplest way to end your lease is to return the leased automobile to a dealership before lease expiration date. However, you remain obligated to the financial responsibilties of the lease including the remainder of the monthly payments plus excess wear and tear or excess KM penalty.
2. Lease Another Automobile
Leasing a new vehicle gives you the opportunity to get out of your current lease but it does not relieve you of your financial obligation. Dealers oftentimes inform them that they can end a auto lease early by signing for a new auto lease. However, they do not always inform drivers that they will add the negative equity (the difference you still owe on the lease and the automobile's current market value) onto the new lease. In essence, you will still pay for the money owing in the old lease as the funds are simply rolled onto your new lease thus making your lease payment extremely expensive as you will be payment for depreciation for two vehicles.
This means that you will be surrendering the auto lease to the finance company without finishing off your financial responsibilites. In this, the finance company will pursue you for payments and if you insist on non-payment, charges will be made which may be detrimental to your credit rating. This relieves the driver of financial responsibilities and least costly in the short-term, but a damaged credit rating can be costly in the long-run as you are unable to obtain credit or charged extremely high interest rates for credit products
4. Lease Buyout
A more complicated process is to buy out the leased vehicle from the finance company. You have the option of keeping the lease buyout or re-selling the automobile. Access to ample funds will be required to perform this transaction. Be beware that if you are planning to re-sell the vehicle, the value of the automobile depreciates the greatest in its first two years and the market value of the automobile will most likely be substantially lower than your buyout price. Certain jurisdictions require that sales taxes be paid in this transaction thus further increasing your potential lost.
5. Auto Lease Transfer
The lessee can find someone to assume the lease, which would transfer the contract and liability to the new driver/lessee. Lease assumption
has become a very popular form of early lease termination, as they are inexpensive and simple. FreeLease has helped numerous Canadians to transfer their vehicle leases. This is the least expensive form of early lease termination.