Ways to End or Extend Your Auto Lease
Last Updated: January 28, 2015
Whether you just signed the agreement or it's set to expire in a few short months, it's never too soon to start thinking about the future of your leased car. You likely have more options than you realize.
Am I Required to Give a Leased Car Back?
No. If you have a closed-end agreement, you have six options for either ending (or continuing) your lease. You can do one of the following:
- Return the Car
- Buy the Car
- Extend the Lease
- Re-lease the Car
- Trade the Car in for a New Lease
- Transfer the Lease to Someone Else
Return Your Leased Car
A few months before the end of your lease, you should receive in the mail a letter from the leasing company reminding you of the date your lease will end and letting you know where you need to take it for the inspection.
If you want to return the car, now is the time to start planning for it:
- Make sure you aren't going over your mileage.
- Replace mismatched tires, and tires with less than one-eighth-inch tread.
- Have the car professionally cleaned and detailed.
- Return the car on the scheduled date for the end-of-lease inspection.
- If there is damage that the leasing company deems more than "normal wear-and-tear" tell them you are going to shop around for the best deal to have the car repaired, as you are not required to have their service department take care of it (be sure to check your warranty as mechanical repairs may still be covered).
What Happens If I Go Over My Allotted Mileage?
You pay for it, which can add up to thousands of dollars depending on the terms of your agreement and just how much you go over. For this reason, it is imperative you pay close attention to your mileage throughout the term of your lease. If you see in the last few weeks that, at the rate you're driving, you're bound to go over by the lease-end date, then minimize your driving of the car. Borrow your spouse's vehicle, carpool, or take public transportation. It most certainly will be an inconvenience, but it's likely a preferable one to the cost of going over your mileage.
What is a Disposal Fee?
Even though it's understood you have the option of giving back the car, you probably still have to pay for the privilege. This is known as the disposal fee, also known as the turn-in fee. If it's in your lease, it should be on the first page of your contract. The fee varies, but can run into the hundreds of dollars.
Buying Your Leased Car
f you're in love with the car, it meets all your needs (now and in the foreseeable future), and you haven't had any problems with it, you can consider a purchase. Note, the keyword is consider. First, have a trusted mechanic take a look, just as you would for any other car you're considering purchasing. If it looks good under the hood, keep in mind it's only a good deal if the leasing company will let you buy the car for its wholesale value (or within $1,000 of it). If the purchase price is very far above that, you can try negotiating a better deal.
Extend the Lease on Your Car
If you're not sure what you want
to do, and need more time to think about it or to see how things work out in the next few months -- with a job change, or relocation, for example -- extending your lease can make sense. However, keep in mind that extending the lease may mean paying fees and penalties. Contact the leasing company and set up a time to go in and negotiate the lease extension.
Re-Leasing the Car
If you're not interested in buying the car but want to keep driving it, you may consider re-leasing it. You get to hold onto the car you love and for a lower monthly payment. Just be sure to only choose this option if the car has performed pretty perfectly for you. Contact the leasing company and set up a time to go in and negotiate a new lease agreement.
That said, this is perfect time consider buying a car instead. You'll pay less in the long run and you'll eventually have a car to call your own.
Trade in and Lease a New One
There are a couple of scenarios in which it may be tempting to trade in your car before the lease is up. Maybe you're just not happy with the car; it's giving you a lot of trouble or just not meeting your unique needs. Or maybe you're driving more than you anticipated and you see that you're probably going to go over your mileage (i.e. be charged over-mileage fees).
First of all, if you are in love with the idea of leasing and nothing can change your mind to buy a car outright, then yes, you may consider trading in the leased car for a different one. However, if you aren't married to the idea of leasing, try holding out with the current car until the end of the lease, particularly if you are driving more than you expected. After all, if you're going over your mileage on this lease, you likely will on the next.
Can I Transfer My Car Lease to Someone Else?
Yes, if you want to get out of a car lease, you can transfer your lease to someone else who wants it. There are a number of websites that facilitate this process (for a price, of course), the two most reputable being Swapalease.com and LeaseTrader.com. Also, keep in mind, that in addition to the fee you pay the lease swap company, your leasing company will also charge a fee for the transfer.
Should I Continue Leasing Cars?
Even though your monthly lease payments are less than you would pay for financing the same car, leasing cars will cost you more in the long run than buying a car outright. Why? Because eventually you pay your financed car off at which point you're able to drive the car with no monthly payments at all.
Bottom line, unless it's super-important to you to always drive a new car (and you don't mind paying more for it in the long run), then you're far better-served financing a car instead.
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