How To Get Out Of A Car Lease Early (And How Hard It May Be To Do)

For many, the best way to acquire a new car, truck, or SUV is to lease the vehicle from a dealership. As convenient as leasing a new or even a used car can be, doing so means you don't actually own the vehicle you drive off the lot. The title is generally held by the financial institution behind the sale, and yes, those factions can legally reclaim the vehicle should you default on the terms of your lease.

Given the stakes, should you find yourself in a position where a default is possible, it would be wise to try and find a way out of the lease before it comes to that. The same logic applies for those who might simply be looking to terminate an agreement because they no longer want or need the vehicle they leased. Whatever your reasons might be, if you currently find yourself in either of those camps, you'll be happy to know there are several avenues you can take to get out of a car lease early.

The bad news is that there aren't really any free or easy ways to exit a lease agreement early, and your available options and their associated costs may be impacted by where you live. Here's a look at a few options worth considering if you need to end your car lease early. 

These are technically two separate options to end a lease early, but we're listing them together because they essentially offer the same outcome for lessees looking for a way out and really only cost you money should you choose to go forward with either. But please understand the stakes when we say that early buyout or termination of a lease are likely the most expensive options available to you. The terms of buying out or terminating a lease early should be explicitly laid out for you in the document itself, as is required by law via the Federal Trade Commission's Consumer Leasing Act.

The financial impact of either option is significant, as they basically require that you pay off the remainder of the money owed on the car at the time of the buyout or termination. That number could vary dramatically depending on how far along you are in the lease agreement. A buyout is the more straightforward option, as you'll simply pay whatever's left on the lease in cash, along with whatever fees may apply. In this scenario, you also take full ownership of the vehicle. 

Lease termination is a little trickier, as the potential resale value of the vehicle at the time of termination will be taken into account. In this instance, the final number will likely be the difference between said resale value and what's left to pay on the lease, with the lessee returning the car to the dealership. Needless to say, if you're looking to end the lease early because you can't afford the payments, these options are not ideal. 

If you're not in a financial position to buy out your lease or pay early termination fees, you might still get out of the agreement by taking steps to sell your car to a private party. However, this option will require a fair amount of legwork, as you'll first need to confirm that selling the vehicle is allowed by the terms of the lease. If it is, you'll still need to pay any early termination fees, as you are ending the lease by seeking to take and then transfer ownership of the vehicle. You're also on the hook for whatever paperwork and additional fees pop up along the way – including any taxes accrued by the sale, which will vary by state and municipality.

When all is said and done, in the right sales scenario, taking this course of action may leave you with a few extra bucks in your pocket. If you're truly strapped for cash, this might be a way to unburden yourself of a lease while also padding your bank account.

If you're less concerned with turning a profit by selling a leased vehicle, you could also try to sell the vehicle to an auto dealership, maybe even to the one you leased it from. Sure, the dealership is likely to offer less money than you'd see in a private sale. But they might also pay off the leasing company as part of the deal, and should take care of any paperwork, fees, or taxes accrued. You might even be able to use any equity as a down payment for a trade-in.  

For many, a better option might be to transfer their unwanted lease to another party, sometimes also called a lease takeover. In the right circumstances, this can be a good option for all parties involved. Transferring a lease means allowing a third party to legally take over the agreement, thus obliging them to cover the monthly payments for the remainder of the lease period.

The ability to take this course of action may vary by state, as well as the terms laid out within the lease. If it's an avenue open to you, it's one that's worth exploring, particularly if you've found a qualified friend or family member who's willing to take over the lease and payments while still allowing you access to the vehicle. Even if you're just looking to rid yourself of the vehicle and lease altogether, a transfer to a third party or one of the many online companies that specialize in taking over or facilitating the takeover of auto leases can be a great option.     

It's worth noting that many leasing companies charge a fee for the transfer, and those online companies aren't working for free, either. Any party looking to take over your lease will likely also have to pass a credit check before the transfer is approved. Those third parties will also be beholden to the terms of the original lease, and some leasing companies may still hold the original lessee accountable if the new party defaults — meaning you should only broker such a deal with a person or company you trust.