How to Break an Auto Lease

Leasing is a financing transaction where you pay for the amount of depreciation that the vehicle experiences over the time period of the lease, but the bank or leasing company keeps ownership of the vehicle. About 20 percent of all new vehicles on the road are leased, according to Kiplinger.com. Many people do not think that you can get out of an auto lease early, but with some planning, you can break an auto lease with minimal impact.

Instructions

1

Determine if you have an assumable auto lease. According to Edmunds.com, 80 percent of all leases are assumable by qualified buyers with no conditions. They estimate 10 percent of all leases can be assumed with one important condition; the original owner assumes at least partial responsibility for the lease after the transfer. Examine your lease documents carefully to see what terms apply to you.

2

Locate someone who wants to assume the lease. Many companies specialize in finding people who are interested in taking over a lease. Leasetrader.com and Swapalease.com are two examples, as well as TakeMyPayments.com. People will assume a lease because they may need a shorter term, more favorable terms or a lower payment.

3

Complete the lease transfer paperwork. Find out the requirements that the leasing company has to transfer the lease, both for you and the person assuming. They will probably want to run a credit check on a candidate. Also find out about any fees that apply to the transfer, or lease ending fees. You may want to negotiate who pays these fees.

4

Sell your vehicle outright if you can't work out a transfer of the lease. Call the leasing company, and they will give you a payoff amount for the lease. If you can sell the vehicle for that amount or more, you will be able to clear the title. If you sell the vehicle for less, you will need to arrange to pay the difference to clear the title. A local credit union may give you a short-term unsecured loan for this. Also check with the leasing company and see if they are interested.

5

Turn the keys in to the bank or leasing company. This should be looked at as a last resort; it will probably report on your credit report as a voluntary repossession, which typically has a severe negative impact on credit. A leasing contract usually states that you will pay a certain number of payments, and also that you can be held responsible for the total of all the payments. Or the leasing company will sell the vehicle at auction and try and recoup the difference from you. Either way, you will end up owing money, and they will probably use aggressive methods to collect their money.