Lease transferring is one of the most cost effective ways of getting out of a car lease early but there are alternative methods too. Let’s have a look at them:
Sell your vehicle outright
People choose this method when they want to walk away from the car lease without going through the lease transfer processing and documentation. In order to sell your vehicle right away, you first have to buy it from the leasing company to assume its full ownership. That means you will have to make all the remaining payments mentioned in your lease contract.
Suppose 12 months are remaining on your car lease contract. Here is what the buyout will look like:
- Monthly payments: $500 per month
- The principal amount: $300
- Amount of payment that is interest: $200
- Number of months remaining: 12
Take the number of months remaining and multiply it by the amount of interest and you will come with the amount you have to pay above the cost of the car: i.e. 200x12 = $2400
In some cases, if the present value of the vehicle is not high, buying the car might turn out to be a favorable option. However, you may not always get lucky since everything depends on what the market value of the car is. It is always recommended to do your own homework and find out the market sale price of your vehicle from other resources.
A car lease is never designed to be worth more than the market vehicle of the car at any point in the lease period. This makes it nearly impossible to sell the car outright without incurring a loss as there is a difference in what you sell the vehicle for and what you owe the leasing company.
If you still want to sell your vehicle outright, just call your leasing company and request a buyout amount of the lease. It is the total price that will be assessed by the bank if you purchase the car. If you asked for the quote a month ago, the price might have changed. So, get the most recent quote.
Refinance your Lease
Refinancing the car lease can solve multiple problems. If you are stuck with a lease agreement that does not allow lease transfers, you can refinance your Lease. Refinancing lets you create a new lease with the company, allowing you to transfer the lease. However, there can be plenty of restrictions with the new company and you may not be allowed to transfer the lease during a specific time period.
What is lease refinancing?
Refinancing your lease is not the same as refinancing an auto loan. The leasing terms mentioned in the contract are not negotiable. If you want to get out of the car lease, you will first have to end that contract and enter into a new agreement. For that to happen, you will have to buy the car and end the lease. So, in short, it means that you are paying all the outstanding lease payments and you are entering into a new lease contract with a new company. Before you go for the option of refinancing, you need to understand that process and know what outcomes you are seeking from it. Remember one thing: If you buy the car before the lease contract is up, you still owe the early termination fee. To avoid this, it is better to buy the lease towards the end of the agreement.
Many people refinance for saving money but this goal can take multiple forms. Since you are doing it to come out of the car lease, you will have a different motivation. Depending on the deal, with refinancing, you can also replace your current lease with a new one. This lowers the payments by re-adjusting the term of the lease to a longer term. When the lease term is extended, it also stretches the depreciation of the vehicle and hence, your monthly payment is reduced.
How to find a good deal?
Here are some ways you can find a good deal for refinancing your car lease:
Get the payoff information
The first thing you will need is the payoff information. It is the total amount at which you can purchase your vehicle. The payoff information is only good for 3 to 30 days. After 30 days, you will need the information again as it is subject to vary.
Look for lease refinance offers
Now you need to search lease refinance companies. You can look for them on the internet. Such websites let you calculate the rate too. For that, you must enter the current payoff amount, year, model, make, mileage and down payment.
Review your options
Once you have all the offers, review them and go for the best deal. The best deal is not necessarily the one with the lowest price. You also have to take care of things such as mileage, maintenance and warranty of the vehicle.
If you want to refinance the lease, you must contact your leasing company directly. It is easy to handle such deals with independent leasing companies as they are likely to handle such transactions.
