How to Determine the Payoff for a Vehicle Lease

You can pay off a leased vehicle at any time. Some people believe there is no way out of a lease until the term is up, but you can actually buy the vehicle from the bank for an amount that is usually equal to any payments due and the balloon payment stated on your contract. You can then finance the remaining amount or trade the vehicle into a dealership towards another purchase. Getting your leased vehicle payoff amount should take you less than 10 minutes.

Instructions

1

Gather your lease payment paperwork. You need the phone number of the bank through which you lease the car and your account number. Check your vehicle's exact mileage, as it will be requested.

2

Call your leasing institution. Follow the voice prompts to reach the customer service department.

3

Tell the bank representative that you want your lease payoff amount. If you want to buy the car or trade it in, ask for the "buyout" amount, and if you want to end your lease early, ask for the "early termination" amount.

4

Give the representative your personal identifying information, including your account number, Social Security number and date of birth, which are usually requested.

5

Write down the amount that the representative gives you and the date until which it is valid. The amount should be good until your next payment is due.

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Can You Remove a Co-signer's Name From a Car Loan?

When you take out a car loan, the lender approves the loan based upon the creditworthiness of both the applicant and the co-signer. The loan contract amounts to an agreement between both you and the co-signer to pay back the car loan proceeds. Generally, you cannot remove a co-signer from a loan unless you actually pay off the loan and replace it with a new loan that does not involve a co-signer.

Underwriting

People with poor credit or limited income often have to involve a co-signer in a car loan application in order to gain approval. If you have good credit but insufficient verifiable income to make the monthly payments, the lender cannot approve your application unless you include a co-signer who has sufficient income to pay the debt. Loans are based upon your ability to qualify for the loan at inception, and the lender does not check whether your income or credit improves or deteriorates after the loan takes effect. Therefore, you cannot remove a co-signer from the loan simply because your income increased and you wish to make payments yourself.

Refinancing

You can refinance a car loan to remove a co-signer if your have sufficient equity in the vehicle to qualify for a refinance. Lenders classify cars as depreciating collateral because cars lose value with age and eventually become obsolete. Very often, the value of a car decreases more quickly than the balance on a car loan. Generally, you can only refinance a car loan if the loan amount does not exceed the car's value. If you owe more than the car costs at the time you plan to refinance, you must pay cash to settle the difference; otherwise, you cannot refinance.

Ownership

Some lenders do not allow co-signers without an ownership stake to sign on loans secured by a piece of collateral such as a car. Consequently, many people who use car loans to purchase vehicles have to add the co-signer not just to the loan but also to the title of the vehicle. When this occurs, in order to refinance the loan into your own name, you must first transfer the title from joint ownership to sole ownership, and you cannot do that until you payoff the existing lien.

Considerations

Most people want to remove co-signers from car loans after they have established credit. However, credit scores involve many different factors and having a good enough score to qualify for a loan by yourself and having a credit score good enough to qualify for a loan with a low rate are two different things. If you used a co-signer who had a very high credit score on a loan, the rate on the loan reflected the co-signer's score. If you refinance the loan and have a good but much lower credit score, you may end up with a significantly higher rate.

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Can I Pre-Qualify for an Auto Loan?

If you can pre-qualify for an auto loan before you walk into the dealership, you will be in a better position to negotiate a deal. When you have money in hand, you can usually get a better deal, according to the website CarsDirect.

Significance

Even if you want to get financing through the dealer, you should try to get pre-approved for a car loan through your bank or credit union, recommends Jesse Toprak of Edmunds.com. You can negotiate knowing that you always can go with the bank or credit union if the dealer can't beat your pre-approved loan.

Strategy

You can get an idea if you can pre-qualify for a car loan by looking at your credit report. You can get a free copy of your credit report from each of the three major credit-reporting agencies -- TransUnion, Experian and Equifax -- once every 12 months. Request this through AnnualCreditReport.com. If your score is higher than 720, you likely will qualify, according to CarsDirect.

Considerations

Don't just look at the number on your credit report. Read the information. Many times credit reports contain inaccurate information. If you find any errors on your credit report that makes your score appear lower than it should be, contact the credit bureau in writing, explaining what the error is and requesting that the credit bureau remove it.

Potential

Another way to determine if you can pre-qualify for an auto loan is to use a loan pre-qualification calculator, such as the one on the Bankrate.com website. If you qualify based on the loan calculator, you are not guaranteed a loan, but you can get an idea how good your chances are. Enter information such as your total income after taxes, your total monthly debt, your credit card limit and how many dependents you have.

Types

Besides trying to pre-qualify for an auto loan through your bank or credit union, try using an online lender. Some of these organizations used to loan through car dealers but have since pulled out and started lending directly to consumers. Find online lenders on your own or go to a site such as Edmunds.com to apply with one of its partners.

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How to Cancel a Car Loan After the Papers Are Signed & the Bank Approved the Loan

Unfortunately, a "cooling off" period does not apply to a vehicle purchase, according to the Federal Trade Commission. You may only return your vehicle to a dealership if the dealer offers a vehicle buyback program or a grace period that allows you to return a vehicle after purchase. However, if you haven't taken the vehicle, even if you've signed purchase paperwork, you can cancel your car purchase. If you have already taken possession of the car, you must return it before the dealer processes your paperwork, which is usually within one or two days.

Instructions

Before Taking the Vehicle

1

Contact your dealership immediately by phone. A dealer will not process your signed paperwork until you take ownership of the vehicle or drive it off the lot. Ask to speak to the finance or sales manager.

2

Explain to the manager that you are unable to purchase the vehicle and why. Your dealer may tell you that you cannot cancel the purchase, in hopes that you'll still pick up the vehicle, but this isn't so. Be firm about your decision not to purchase and tell the manager that you aren't going to take possession of the car.

3

Call your state's motor vehicle department to find out where to complain about the dealership if a manager claims that you can't cancel your purchase or refuses to return your deposit or down payment. Before doing so, let the dealer know that you plan to file a complaint with the proper state department, and it will likely return your money.

After Taking the Vehicle

4

Call the dealership immediately following your vehicle purchase. You may return your vehicle the same or the next day of purchase. The dealer will not immediately process your loan or motor vehicle paperwork, as the paperwork must be delivered or mailed to the proper establishments.

5

Speak directly to the sales manager. Salespeople or other dealer personnel do not have the authority to cancel your vehicle purchase. Tell the manager you are bringing your vehicle back and do not want to purchase it.

6

Return the vehicle to the dealership promptly, even if the dealer tells you otherwise. Bring all vehicle items with you, such as extra keys and Owner's Manual.

7

Park the vehicle in front of the dealership. Return vehicle items to an employee inside of the dealership. Leave the vehicle and depart with a pre-arranged ride.

8

Keep your purchase paperwork and wait to see if the dealer contacts you. If you returned the vehicle promptly, the dealer will not process your purchase paperwork in hopes of avoiding a complaint, a problem with its lender or reputation issues. If the dealer or lender contacts you to pick up the vehicle, you must do so, as your paperwork has likely already been processed.

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What Is Blue Book Value?

If you're in the market for a car, whether it's new or used, you'll do yourself a lot of good by first determining how much your car is worth before you buy it. Sellers can also learn a lot by consulting sources like the Blue Book and other publications that track car values and routinely publish and update them.

Kelley Blue Book

It didn't take long after the first mass-produced cars started appearing for the used car market to come into existence. Determining a price for a used car was sometimes difficult to determine. Since 1926, the Kelley Blue Book, commonly just called the "Blue Book," has been available to car consumers. This guide lists the estimated value of nearly any used car. The so-called "Blue Book" value of a car arose because the company published the guide with a blue cover. Today you can find Blue Book values both in printed form and online.

Factors

If you want to find out the Blue Book value of a car, you can go to the Kelley Blue Book website or find the newest version of the published guide at your local bookstore or library. To find the car's value, you have to know certain information, such as the car's make, model, year and mileage. For example, according to the Kelly Blue Book website, a 2009 Audi A3 2.0T Quattro Wagon with 25,000 miles and standard options and in excellent condition has a trade-in value of $23,175, as of April 7, 2011.

Uses

Knowing the Blue Book value of a car can be invaluable to anyone interested in buying or selling a car. Whether you're trading in a car to a dealer and want to ensure you get a fair price or if you want to know what price you should list your car at if you sell it privately, using an objective measurement like the Blue Book gives both the buyer and the seller common ground for beginning negotiation.

Other Valuation Methods

Auto buyers and sellers don't have to rely on the values determined by the Blue Book. Other evaluation methods are readily available and can also help you determine what the fair market value of a car is. The NADA guide, created by the National Automobile Dealers Association, has been around since 1993 and provides similar information. The NADA values are available online and in published book format.

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What Is Tier 1 Credit in Auto Financing?

When an individual purchases a new car, most often he needs an auto loan to pay for the vehicle. The purchase price and interest rate determine the amount of the monthly payment.

Interest Rate

A borrower's credit score determines the interest rate. The tier a borrower falls into is based on a credit score provided by the Fair Isaac Corp. A FICO score ranges from 300 to 850, and the higher it is, the better the interest rate a borrower will receive on the loan.

Tier One

A tier one credit score allows a borrower to receive the best rate when purchasing a car. According to Edmunds.com, a tier one borrower would have a FICO credit score of 720 or higher.

Tips

A borrower should compare the interest rates available through lenders such as auto dealerships, banks and credit unions. Before applying for a loan, a car buyer should check her credit score to know what tier she falls into and to be sure she is receiving the best rate available.

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What Is an Assumed Lease?

A lease assumption allows a consumer to take over a lease from another lessee who is no longer able to satisfy the conditions of a contract. Assumed leases are common for rental properties and vehicle contracts. Lease assumption brings several advantages to a consumer, such as money savings and a shorter leasing contract.

Low Upfront Costs

A lease usually requires upfront costs, such as a down payment for a vehicle or a security deposit for a property, that may be as much as several thousand dollars. When a consumer assumes a lease, the original lessee has already paid all the required fees and deposits. A new lessee saves this money, as many of the fees are assessed with the initial lease contract and do not apply, when another individual takes over a lease.

Incentives

Lessees may offer incentives to consumers who take over their leases. They may offer a cash payment upon a successful completion of a lease transfer. Such incentives are common for car lease transfers. When transferring a property lease, a new lessee may get to keep a security deposit as long as he follows the contract obligations and leaves the property in a proper condition at the end of the lease term. If a property lease is paid ahead, a new lessee may occupy the property for free in exchange for maintaining the property and paying the utilities.

Advantages

Along with financial incentives, a consumer has other advantages of assuming a lease. Consumers may lease a vehicle to see if they like it before purchasing it. A new lessee gets to enjoy a newer vehicle and a lower monthly payment, as leases usually offer lower payments than loans. He also may have an option to buy the vehicle at the end of the lease term. A consumer may take over a short-term property lease to see if he likes the property and the area or if he needs a temporary housing arrangements.

Considerations

Lease assumptions may become costly for a new lessee if he does not follow the lease contract. Vehicle leases often have mileage limits and other restrictions. A consumer may have to pay substantial end-of-lease charges if he does not follow the conditions of the lease contract. A property landlord may charge penalties if a lessee does not follow the conditions of a lease contract. A new lessee should read the contract carefully and try to negotiate more favorable terms before signing it.

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