Auto Loans

How to Get out of a Car Lease

That sinking feeling of realizing you need a lower car payment isn’t fun. Maybe you’ve discovered your still-new car isn’t cutting it for your larger family, new job or, simply, changing tastes.

It happens. For anyone who has lost their head over a beautiful car, been hit with an unexpected expense or discovered a car isn’t right for them, here are seven ways to get out of a car lease with the fewest financial penalties and least amount of pain possible.

Ask to lower or suspend payments
Transfer it
Sell it for enough to cover the buyout
Trade it in
Use the Servicemembers Civil Relief Act
Use the lemon law
Return it and pay the penalties

1. Ask to lower or suspend payments

Talk to the leasing company. Don’t be embarrassed if you’ve run into financial trouble. Focus on a solution. It’s certainly better for you — and the lender — to suspend payments rather than stop paying altogether, leading to a possible repossession.

The lender would have to pay to repossess the car, process the paperwork and sell the car at auction, usually for a loss. You don’t want to have a nonpayment or repossession on your credit report.

Note that lowering or suspending payments does not excuse you from eventually paying that money. You will have to pay it, and with interest, but this can be the simplest solution if you’re in a tight spot for a couple of months.

2. Transfer it

You are not the first person to need to get out of a lease early. Advertise for a transfer, which is also called a lease takeover. Four websites where you could transfer a car lease are Swapalease, LeaseQuit, LeaseTrader and Some people would be happy to take over your lease because it can be cheaper than starting from scratch.

Here are a few steps to follow:

  • Check with your leasing company. You’ll first need to see if it allows transfers and if there are any requirements for a new lessee. Some companies are more accommodating than others.
  • Determine fee costs. You will probably still have to pay transfer fees to the lender and the website service, if you use one. The website might charge you for the advertisement to find the new lessee and, ultimately, a commission fee upon transfer. These fees may add up to a few hundred dollars, which is still much less expensive than typical early lease termination fees.
  • Look at tax costs. There may be taxes that the new lessee has to pay. But the car will have to be titled and registered in their name with their state’s Department of Motor Vehicles (DMV).

It’s not uncommon for people who have high lease payments to offer incentives for others to take over their lease, such as covering transfer fees or paying a month ahead for the new lessee. It might also be helpful to mention in a lease takeover ad that the new driver may be able to take advantage of rebates or special incentives that are only offered to leaseholders when the lease ends.

3. Sell it for enough to cover the buyout

If a transfer sounds too complicated, you may be able to sell it outright. There are two possible ways to do this:

  • Advertise your car. Find out from the leasing company how much it would cost to buy the car, fees and penalties included, and then advertise it. Put it up for sale at the total lease buyout price using your preferred method: social media channels, used-car buying sites such as Craigslist or Autotrader, or old-school classified ads in your local newspaper. The new buyer pays you, you pay the leasing company and the new buyer gets the car.
  • Buy it outright, then sell. Depending on the leasing company, the person you find to buy the car could buy it from the leasing company with your official blessing, or you might have to buy it first, turn around and sell it.

Note: If you buy your leased car outright, be aware of your state’s tax law. When you first buy the car, you’ll have to pay taxes on it. Some states have a window of time, such as 10 days, in which you could sell the car and the next buyer doesn’t have to pay taxes. This way, taxes are only paid once — costs that could be reimbursed by the buyer.

4. Trade it in

This should not be your first choice, necessarily, but it can be a solution. Trade your lease in to buy or lease another car and roll the penalties or fees from ending your lease early into the loan or lease on your new car.

If you are still interested in going this route, you have two options:

  • Trade it in for a used car. The primary reason you might consider this idea is that used cars are much less expensive and don’t depreciate nearly as quickly as new cars. So you could get out of the lease, have a lower payment and limit the accumulation of negative equity.
  • Trade it in for a new car. You could trade for a new car — perhaps taking advantage of rebate programs and generally lower APRs — but it’s important to remember that new cars are more expensive and depreciate quickly.

The best way to get a good deal on your APR in a car loan is to shop around. You won’t hurt your credit score by applying to multiple lenders for an auto loan any more than you would if you applied to only one, as long as you do all your applications within a 14-day window. Potential lenders include your bank or credit union, and consider filling out an online form at LendingTree, which could provide up to five potential auto loan offers from lenders.

5. Use the Servicemembers Civil Relief Act

If you need to get out of a car lease because of military duty, you may be able to under the Servicemembers Civil Relief Act (SCRA). It’s a law designed to ease financial burdens on U.S. service members who have to rearrange their personal lives to answer military orders. Contact the lender and tell it about your deployment or relocation orders. Also, ask what paperwork you need to provide. If you’re having trouble or need more information, you can learn more about the SCRA from the Department of Justice.

6. Use the lemon law

If the reason you want to get of your lease is that the car has had multiple or major problems, look up your state’s lemon law. Vehicle lemon laws protect consumers from buying or leasing vehicles that, in effect, don’t work. Each state has specific requirements for a vehicle to be considered a lemon and specific steps you have to take before you can demand the seller take the vehicle back and refund your money.

LendingTree looked at how to avoid buying a lemon for your next car or you could check your state’s DMV website or your state’s attorney general’s website for the specifics that could apply to you.

7. Return it and pay the penalties

If all else fails, return the car to the dealer and end the lease early. Incur the fees and penalties as necessary and set up a monthly payment plan if you can’t pay them outright. Doing this is probably better for your financial situation than having the car repossessed or declaring bankruptcy.


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