Anyone get out of a car lease early??

[threeh]

I still have a year on my lease, but I'm getting close to my alloted miles and I really want to get something better on gas and handles better in the snow. I've never tried to get out of a lease early, can I?? Thanks for any info!!

[DizneyRox]

A year? Nope... Never seen it happen but maybe.

Here's the problem, many manufactures are stopping leases. It doesn't make financial sense for them anymore.

From your description, you have a car that's high mileage, doesn't get good gas mileage, and probably not a good choice for someone looking for a car right now (with winter quickly approaching). That doesn't bode well for negotiating with a dealership.

Many of my friends lease, and have been getting the run around from dealerships as they approach the end of their lease. Even one who wanted to get into a more expensive car (worse mileage, etc) and just couldn't get out of his current lease until about a 2 months out. Come to think of it, I think they only got him out of one month's payment.

I'm not a fan of leasing at all...Thought about it once or twice, but I just can't get over the lack of actually owning something after a few years.

[RockinRobin]

Sure you can get out of your lease but you will have to pay the rest of the payments. Or if you do get a different car that money will be tacted on to your next car amount you have to pay for it. My advise is don't do it! If you are over milage you can pay the car out right at the end of the lease so you don't have to pay the over milage fee, which can be a lot usually .10 to .15 per mile over. Any way you look at it it will cost you money. I am a retired dealership cost account I figured out if the dealership made any money on a deal, and they would make money from your deal if you tried to change cars now.

[BrerGnat]

I leased a car a few years ago. I'll never do it again.

I bought the car at the end of the lease...kept it another 2 years, then sold it. That's the best way to deal with it. If you turn it in, you lose all that money you made in payments, and that is just crazy. The only reason I leased the car was because I needed a car and found a fabulous lease offer on a new car with $0 down and lease payments that were super affordable for me in college, so that is why I did it. It is a bad financial decision in general, though. I didn't go over mileage, luckily, but what I thought was "wear and tear" ended up being about $3500 worth of "damage" according to the dealer, and rather than pay for that, I just bought the car at the end of the lease, NEVER fixed anything, and then sold the car, which was 6 years old by then, to a buyer who was fine with the "wear and tear" on it...

[Ian]

I bought the car at the end of the lease...kept it another 2 years, then sold it. That's the best way to deal with it. If you turn it in, you lose all that money you made in payments, and that is just crazy.Sorry to pick you on Nat, but I have to correct what you said here since it's pretty inaccurate.

You didn't "lose all that money you made in payments" ... you were paying the money for a service. The use of a vehicle.

Auto leasing is, without a doubt, the single most misunderstood process in the world. People have this illusion that, when you buy a car, you "have something for your money." You have nothing. You have a loss. You lost a significant amount of money just by driving your car off the lot when you bought it. It's called "depreciation" and it's the absolute worst part of buying a car.

In the financial world, the rule is "buy things that appreciate and lease things that depreciate." By leasing, you transfer the depreciation risk from yourself to the lease company.

It's hard to understand, but think of it this way. I leased my Tahoe in December of 2008 for three years. Over those three years I'll pay approximately $21,600 for the use of the vehicle. The sticker on my car was $48,000, so if I bought it over the same time frame (assuming a very nominal interest rate of 3.9%) I would have paid about $52,000 for the same vehicle.

But, you'll say, if you bought the car, at the end of the three years you'd own it and it has value. Wrong. It has no value. It has negative value. Why? Because over those three years my truck will have depreciated in value. Not only that, but because of gas prices it's depreciated significantly more than the norm. When I come off lease, my truck will most likely be worth maybe 40% of what I paid for it, or $19,200.

That means my loss over the life of my loan will be approximately $32,800. Instead, I "lost" only $21,600, because I transferred that depreciation to the lease company.

Now you tell me who got the better deal? And since most leases now include routine maintenance like oil changes, inspections, brakes, etc. the numbers are actually slanted more in my favor.

Now look ... if you're the type who keeps your car for 10+ years, then yes. Buying might be a better option. But if you're going to buy your car, finance it over 3-5 years, and then turn around and trade it in, you're making a significant financial boo-boo and costing yourself serious money.

Anyway, to the point of the original post ... there's no easy way to break a lease early. You basically have to either pay out the sum of your remaining payments or roll that cost into your new vehicle.

There is a website you could try ... don't know anything about them but they were in the news quite a bit when gas prices started rising. It's www.swapalease.com (http://www.swapalease.com) ... they claim to help you find a buyer for your remaining lease payments.

[tink'72]

I got out of my last lease a year and a half early. I went to the dealer I bought the car from and people say that made the difference. But to answer you question yes it can be done.

[d_m_n_n]

We got out of a lease early 3 years ago. We had about 16 mos. left on the lease. I'm not sure how the dealer worked it, but he did (However, he was somewhat a family friend. I don't know if that helped or not.). It wouldn't hurt anything to go and check it out.

[diz_girl]

In the financial world, the rule is "buy things that appreciate and lease things that depreciate." By leasing, you transfer the depreciation risk from yourself to the lease company.

It's hard to understand, but think of it this way. I leased my Tahoe in December of 2008 for three years. Over those three years I'll pay approximately $21,600 for the use of the vehicle. The sticker on my car was $48,000, so if I bought it over the same time frame (assuming a very nominal interest rate of 3.9%) I would have paid about $52,000 for the same vehicle.

But, you'll say, if you bought the car, at the end of the three years you'd own it and it has value. Wrong. It has no value. It has negative value. Why? Because over those three years my truck will have depreciated in value. Not only that, but because of gas prices it's depreciated significantly more than the norm. When I come off lease, my truck will most likely be worth maybe 40% of what I paid for it, or $19,200.

That means my loss over the life of my loan will be approximately $32,800. Instead, I "lost" only $21,600, because I transferred that depreciation to the lease company.

Now you tell me who got the better deal? And since most leases now include routine maintenance like oil changes, inspections, brakes, etc. the numbers are actually slanted more in my favor.

Now look ... if you're the type who keeps your car for 10+ years, then yes. Buying might be a better option. But if you're going to buy your car, finance it over 3-5 years, and then turn around and trade it in, you're making a significant financial boo-boo and costing yourself serious money.

Ian, I never thought of it that way, that you're out more money due to depreciation on the car that you own rather than by not owning a car at the end of a lease. I guess that this theory applies to some cars rather than others. It's something that I might consider in the future if I want to get a new car every 3-5 years.

Leasing doesn't make sense for my family right now. My current car (VW Jetta diesel) is a depreciation anomaly and hasn't really depreciated since I bought it (maybe 10% from what I paid for it 3 and 1/2 years ago). Out of the seven cars that I've owned only two were bought new and DH buys a new car every 10 years.

[Ian]

It is true that certain cars (like Hondas, for example) hold their resale value much better than others. In those situations, buying may not be as financially unattractive as it is for other vehicles.

However, bear in mind that it's the depreciation risk that you're transferring, not necessarily the depreciation itself.

One other important point to make that I forgot to mention before, though, is that mileage is a big key to whether or not leasing will work for you. If you drive like 20,000 miles a year, don't lease. The economics won't work in your favor in that case.

[BrerGnat]

It is true that certain cars (like Hondas, for example) hold their resale value much better than others. In those situations, buying may not be as financially unattractive as it is for other vehicles.

Ah Ian, you chastised me too quickly.

I indeed leased a Honda Civic EX Coupe, back in 1998. I scored with $0 down (and I mean ZERO down, no security deposit, nothing!) and payments of $179/month for 48 months lease. Over 4 years, I paid $8592 in payments on a brand new Civic. In those 4 years, the car barely depreciated half that amount. I did not go over mileage on the lease. In fact, I was significantly under the 12,000/year allotted miles. Due to the low mileage, the car had an even higher resale value. I purchased the car for a price (pre-negotiated at the beginning of the lease) of $9500. When I sold the car 2 years later, I sold it for $10,500. At that point, I had driven it for 6 years, and I still sold it for over 60% of its original sales price!

And that's why I only buy Hondas and Acuras...

And we keep our cars for a long time now. :D

And, we'll have to just disagree on the opinion that leasing is financially "not that smart". I am not a financial analyst by any means, but even taking into account depreciation, a car is a LIQUID ASSET once you have paid for it. If it works, it is worth something. If you financed it for, like 7 years at 20%, then no, you did not make a smart financial decision. However, if a car is purchased outright, or financed intelligently, it is a MUCH smarter decision than leasing.

You can certainly argue that in a lease you are paying for the ability to drive a car, but that is a LOT to pay for a "service" to then walk away with nothing at the end...to me, it is like renting vs. owning a home. We currently rent, and it kills me. Yes, we are paying for a place to live, but really, every year we are spending close to $30K in rent, and at the end of the year, that is ANOTHER $30K that is gone and we have nothing in our names to show for it, know what I mean? And we've lived here 4 years already and we'll be here 2 more years, most likely. Do the math...

[Ian]

...to me, it is like renting vs. owning a home.Actually, it's nothing like that ... see my statement that "you lease things that depreciate and buy things that appreciate."

Houses appreciate, so you buy them.

Also, from reading your story, it sounds more like you're defending leasing rather than buying. You leased your car and made out like a bandit!

And bear in mind, your lease was so favorable because your car was projected up front to have that high resale value/low depreciation. That's what goes into calculating the residual (i.e. a very important factor used in calcing a lease payment ... basically expressed as the projected % your car will be worth at lease end).

[BrerGnat]

Houses appreciate, so you buy them.


Not so fast...

Have you seen housing values lately? Especially in the higher cost markets?

Housing values have plummeted where I live in the past 6 months.

New homes that were selling for $600k are now going for $450k. How do you think those people who bought those houses for $600K a year ago feel now?

Nothing is certain in today's economy. That is precisely why many car companies are bailing out on offering leases these days. There's not much in it for them either.

[Georgesgirl1]

It's called "depreciation" and it's the absolute worst part of buying a car.

.

This is why DH and I would never lease a car or buy a new car. Either way you lose money. The smartest thing to do is to buy a reliable car that is a few years old. Let someone else get hit with the enormous depreciation that happens when you drive a new car off the lot!

We have even sold two cars for more than we paid for them in the first place after driving them for a few years. Now that is a way to beat the system...

[daparish]

I know leasing is not for everyone but it works for me and DH. I am on my third leased vehicle. Even before leasing, I always had a car note. By the time the car was paid off it was time for a new car and in some cases, I needed a new car even before the old car was paid off. I have never had any problems when turning a car in and have never been charged any additional charges. I have never tried to get out of any of the leases so I can't offer any advice to the OP.

[conorsmom2000]

We've leased cars for various reasons and it always been the right decision for us. My prior lease was on a 2003 Chevy Trailblazer and it was a 4 year lease. Up until recently both Mike and I have had seriously low mileage on our cars - Mike worked 2 miles away from home and I worked from home. So, when we started having major troubles with the 3 1/2 year old Trailblazer, with only 21,000 miles on it, we decided to start looking into what our options were. We were very interested in a Honda Pilot so we stopped by a Honda dealer and ended up driving away in a brand new 2007 Pilot that night - they bought out the 6 months left on my Chevy lease. Mike has a 2005 Chevy Impala, with 17,000 miles on it, which is also a lease and which has also turned out to be a nightmare of a car. So, when his lease is up next July, we will return it and probably get a Honda Civic for him. A local GMAC dealer is adverstising that they are taking back leases up 9 months early - Mike misses that by a month, but it doesn't matter as he wouldn't want another GMAC. So, yes, it can be done, but I think it's up to the dealer....

[Ian]

Not so fast...

Have you seen housing values lately? Especially in the higher cost markets?

Housing values have plummeted where I live in the past 6 months.

New homes that were selling for $600k are now going for $450k. How do you think those people who bought those houses for $600K a year ago feel now?

Nothing is certain in today's economy. That is precisely why many car companies are bailing out on offering leases these days. There's not much in it for them either.Over time, homes appreciate. The market is going through a down-cycle right now, yes, but trust me. The values will go back up. This is a very anomalous market. God isn't making any more land and people will soon realize that.


Outside of certain exotics, cars never appreciate.


This is why DH and I would never lease a car or buy a new car. Either way you lose money. The smartest thing to do is to buy a reliable car that is a few years old. Let someone else get hit with the enormous depreciation that happens when you drive a new car off the lot!

We have even sold two cars for more than we paid for them in the first place after driving them for a few years. Now that is a way to beat the system...Eh. Even then I'm not sure you win out.

You have to look at total cost of ownership. Eventually you have to spend money to replace transmissions, radiators, belts, brakes, and a whole host of other maintenance expenses. With leasing, you have zero maintenance costs outside of gas.