The Penalty for Turning in a Car Early on a Lease

The penalty for turning a car in early on a lease includes paying all remaining lease payments and the other fees that constitute the early termination fee for the lease. Although the exact fees charged for an early termination vary between lenders, the amount normally includes all remaining lease payments, a disposition fee, and charges for any mileage on the vehicle in excess of the contracted amount. This total dollar amount is often higher than expected by lessees, particularly because all remaining lease payments must be made to end the lease early.

Remaining Payments

The majority of the penalty charged for returning a leased vehicle early requires paying all remaining lease payments. Unlike a traditional loan, where you can trade a vehicle in and receive a trade credit, a lease is more like a long-term rental or apartment lease than a traditional car loan. As such, substantial fees are charged if you want to end the lease early. For example, if your monthly lease payments are $300, and you want to get out of a 48 month lease after 12 months, the 36 remaining payments total a surprising $10,800.

Disposition Fee

Most leases require a disposition fee to be paid to the lender at the completion of the lease term. This fee is due whether the lease is terminated early or if it ends at its scheduled maturation date. The only exceptions to paying a disposition fee occur when you turn in your leased vehicle in order to lease another from the same leasing company. Many consumers do not consider the disposition fee when they first lease a car or truck, so be prepared to pay this amount when considering an early lease termination.

Mileage Fees

All leases have a contracted mileage amount, referring to the total number of miles that can be driven over the lease term. Common terms include between 10,000 and 15,000 allowable miles per year. However, in the event that the mileage is exceeded, mileage charges are assessed. Typical mileage charges range between 15 and 25 cents per mile. If you have driven more than the allowable mileage before you choose to terminate your lease early, you will be liable for the excess mileage.

Consequences of Not Paying the Fees

If you elect to return your leased car or truck to a dealership before the scheduled maturation date, but you fail to pay the early termination amount, the remaining balance on your lease could be sold to a collection agency where your non-payment will be reported to the three major credit bureaus: Equifax, Experian and TransUnion. The collection accounts associated with non-payment will make it difficult to secure an additional auto loan or lease, so budget for these charges or roll them into your new loan or lease to ensure they are paid.