How Tond Your Lease Leasing Returns Madeasy NADAguides

May 14, 2018 No Comments

by Jeff Youngs

How Tond Your Lease  Leasing Returns Madeasy  NADAguides

Millions of consumers lease a vehicle every year. In doing so, they agree to specific financial terms and a vehicle maintenance schedule for a set period of time. There is normally a purchase option included by Manufacturers with the lease as well. Because the consumer signs a set lease term, most believe a lease cannot be ended early. This is not true. In fact, all leases can be terminated early.

There are many reasons to terminate a lease early – from unexpected life events to simply becoming bored with a vehicle. In order to ease the penalty of an early termination it is important to know your options and prepare your vehicle.

It is unlikely you will be able to find a pain free option when terminating a lease early. However, depending on your circumstances and lease terms, you may be able to greatly reduce the pain associated with early termination.

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Early Termination Options

There are essentially three options when one is considering terminating a lease early – return the vehicle to the dealer, lease takeover, or vehicle purchase. Within each of these options, there are different approaches one can take. For better clarity, let’s take a look at each one:

Return the Vehicle to the Dealer

Taking a lease back to the original dealer is always an option. Some refer to this as a “traditional lease termination”. This option will require the least amount of work, but may result in the largest penalty paid. The dealer will require the payment of all penalties and may even require all remaining outstanding lease payments be made on top of said penalties. While the name “traditional” may sound harmless, this option should be avoided if possible.

A somewhat less painful option is to take the lease back to the dealer as a trade in. Instead of simply returning your lease to the dealership; in this situation, you trade in your current lease for a new lease. This option will still incur penalties, however, the penalties can often be rolled into the new lease term allowing the consumer to absorb the cost over an extended period of time.

Lease Take Over

If a consumer needs to end their lease early, it may be worthwhile to reach out to friends, family members, or other individuals to see if they would be interested in assuming the lease. Under a lease transfer or lease assumption the original lessee is no longer responsible for the payments, but may be responsible if the new lessee defaults.

Another option is to find a company that specializes in lease transfers. These companies will list your vehicle and lease terms on their website, exposing it to thousands of consumers who are interested in taking over a lease. If a person decides they want to take over your lease, the company will handle the transfer logistics allowing you to simply sign the paperwork and hand over the keys.

Again, it is important to check the original lease documents and be aware of any transfer fees or penalties as well as your responsibilities regarding default (or anything else) after a lease transfer is complete.

Vehicle Purchase

Included in any lease is a payoff or buyout amount. Paying this amount to the leasing company will allow you to purchase the vehicle outright and end the lease early without penalty. The payoff amount will be in the original leasing documents. It is important to know the market value of the vehicle when considering this option. If the market value is below the payoff amount, you may have to pay more than the vehicle is actual worth.

Lessees can also sell their leased vehicle to a third party buyer. The amount owed to the leasing company is the same payoff amount that the lessee would be required to pay. In this case, even if the vehicle’s market value is below the payoff amount, a sale may still save you money if the remaining monthly payments add up to more than the difference between the market value and payoff amount.

Prepare Your Vehicle

Whether you are considering terminating your lease early by taking it back to the dealer, transfering the lease, or a purchase; preparing your vehicle ahead of time can save you money and avoid costly penalties.

Clean

The terms of your lease agreement likely state that the vehicle needs to be returned in clean and well maintained condition. If the vehicle is returned and deemed to not be clean and/or well maintained, the dealer may charge additional penalties. Likewise, with a lease transfer or vehicle sale, a clean and well maintained vehicle will attract more interest and a better price.

Check the Tires and Brakes

During the lease term, responsibility for vehicle maintenance usually falls on the lessee. Before you terminate a lease early, check things like tire treads and brake pads to make sure they still have plenty of serviceable life. The lease contract will have all the maintenance details you need to know; like minimum tread levels, etc..

Take Photos

When the vehicle is cleaned and all maintenance is up to date, take pictures of everything. Make sure to capture things like the odometer, interior, engine, tires, tire tread, exterior, and lights. Detailed photos like this will help attract interested parties to your vehicle, or they will be helpful if the condition of the vehicle needs to be disputed with the dealership or lease owner.

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