How Do You Get Out of a Car Lease Early? The Complete Guide

Kelly Boyer Sagert

Updated November 10, 2021

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

Wondering how to get out of a car lease early? If you’re thinking about leasing but first want to understand more about how to get out of an auto lease in case your circumstances change, here’s what you need to know about how car leasing works as well as tips on negotiating your lease agreement. Effective negotiating up front is important because, if you want to get out of a car lease before your term ends, the options available to you will vary based upon the specifics of the lease agreement you signed. First, let’s consider the options.

Getting Out of a Car Lease Early: 4 Options

Ending a car lease early is typically accomplished by going one of the following routes:

Early termination of a car lease
Lease buyout
Lease transfers
Buying another car

Here’s more about each method.

1. Early Termination of a Car Lease

Early termination is a straightforward way of getting out of car leases early. To see what this might involve, review your lease agreement to see what termination fees are listed and what else you might be required to pay to get out of the lease. The termination fee can be more than $1,000, and there may also be a lease disposition fee, any fees charged for excessive wear and tear, fees for going over the mileage listed in the agreement, and so forth. Plus, you also need to consider how many of the remaining monthly payments you would be responsible for making. If you’re interested in getting out of an auto lease you already have through this method, contact your leasing company for the actual figures and then decide if it’s worth following through.

2. Lease Buyout

With a lease buyout, you purchase the leased vehicle outright. Although this is often done at the end of a lease, most leasing agreements will allow you to buy the vehicle before the lease expires. Look at the leasing agreement for the residual value, which is the amount the leasing company estimated that the car would be worth at the end of the lease. Then verify that you can purchase the car before the term ends. You will probably have to pay the residual value plus any remaining lease payments as well as sales tax and lease disposition fees. When you buy the car, you save the money you’d have paid in early termination fees, but look at the pros and cons of buying it now versus or continuing to pay on your lease and then buying the vehicle. Once you buy it, you’ll have the advantages of ownership, like equity, the right to make modifications, and no mileage limits. However, you won’t have any free servicing from the dealer and your payments may be larger. Your leasing company should be able to share payoff schedules to help you decide. (One reason why people who lease a car decide to buy it: if they’ve gone over the mileage limits and know that they’ll need to pay an overage fee per mile.)If you’re considering a buyout, no matter the reasons why, give some thought to the timing and the fees you’d have to pay at each point of the lease’s term. If you’re deciding whether to buy out early, you may discover that the amount of fees charged means that it’s more financially savvy to refinance the car into your name at the lease’s end.

Lease Buying Out Funding Options

If you’re paying off the vehicle and the associated fees in cash, then you simply verify the amount and pay off the lease. Need financing? Just like you would for any other type of vehicle loan, shop around. The leasing company may offer you financing, but its rates and APRs may not be the best, and there aren’t extra fees if you go with your own financial institution of choice. The lease buyout loan will be structured like a refinancing loan where you borrow money to pay off the current amount owed and then make payments to your new lender. You can get offers for auto loan refinancing quickly and easily at Lantern by SoFi.

3. Transfer Leases

In many cases, you can secure an early termination of a car lease by transferring it to someone else. This may be the least expensive option. If you want to get out of your auto lease early by transferring the lease, check with the leasing company to make sure it allows this. If it does, consider whether the new lessee (the person who will hold the lease) will take on full liability? In other words, if they don’t make the payments, are you liable to make them? If you’d be liable, you could be stuck with making the overdue/missed payments while not having the vehicle to drive. Ask the leasing company if it’ll run a credit check on the person who’d take over the lease. If it doesn't — in which case you’d be liable under your leasing agreement to continue to make the payments if the new lessee doesn’t — then that’s something to think about.If you don’t already know someone who wants to take over the payments during the remaining term of the lease, there are websites that match up lessees with people who are interested in taking one over, such as Swapalese and LeaseTrader. These websites usually charge $100 to $350 for their services, and the leasing company may charge a transfer fee, often around $300. Lessees wanting to terminate their lease early can add up these fees to decide if getting out of car leases is still an attractive option. Some people who want to get out of their lease might decide to offer a financial incentive to get someone else to take it over for them. If you do that, factor in that dollar amount, as well, when deciding if the transaction is worth it to you.

4. Buy or Lease Another Car

To exercise this option, you’d take the vehicle to a dealership to see how much money it would pay for it. (While you don’t own the vehicle, in this scenario you’re essentially trying to arrange a sale from the leasing company to the dealership.) If that amount the dealership offers is greater than the residual value of the car (specified in your contract) plus the amount you owe on the lease, you could use that difference to put toward purchasing or leasing another vehicle. When you owe more than the dealer would pay for the vehicle, some lenders will combine what’s still owed on the leased vehicle with the loan for the one you’re buying or leasing. Payments will be higher with this merged loan and it’s likely that you’d be “upside down” on it, which means you’d owe more on the loan than your newly purchased vehicle would be worth, and is typically financially precarious. Going this route involves two key decisions. The first is whether to end your current lease early, and the second is whether to buy (rather than lease) your next vehicle. So, weigh the pros and cons of buying a car as well as the impact of ending a lease early. Having a good credit score can help you to get better financing although there are lenders who will offer loans for people with less than stellar credit scores.

The Takeaway

There are several ways you may be able to end a car lease early. These include paying to terminate the lease early; a lease buyout; a lease transfer; and arranging the sale of the car to purchase or lease another car. Weigh the advantages and disadvantages of each approach and then choose the one that makes the most sense for your situation. If you already own your car but think you can get a better interest rate on your loan now you may want to consider refinancing. Lantern by SoFi can help. Fill out one quick form and receive multiple auto refi loans offers from lenders in our partner network.

Photo credit: iStock/FG TradeThe tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.SOLC1021226

About the Author

Kelly Boyer Sagert

Kelly Boyer Sagert is an Emmy Award-nominated writer with decades of professional writing experience. As she was getting her writing career off the ground, she spent several years working at a savings and loan institution, working in the following departments: savings, loans, IRAs, and auditing. She has published thousands of pieces online and in print.

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