What most of us know that the only way of ending a car lease early is the process called ‘Early Lease Termination’ by which the lessee is required to pay a penalty for early termination plus the balance of the remaining payment.
That means if the monthly payment is $600 a month and 8 months are remaining on the lease contract, then the lessee owns $4,800.00 (600x8 payments) plus the penalty.
Common lease termination penalties
The penalties for Early Lease Termination vary from one dealership to another. Some of the common forms of penalties include:
- Remaining lease payments
- Early termination fee
- Storage and transportation cost of the vehicle
- Cost related to repairing the car for sale
- Taxes associated with the lease (if any)
- Negative equity between the lease amount and the current value of the vehicle
Can you get a quote for Early Lease Termination?
Early Lease Termination is not available on all lease contracts and it is at the discretion of your finance provider. You can always discuss your options by speaking to the leasing company.
Will it affect my credit score?
It is fair to ask if the Early Lease Termination will affect your credit score. Take a sigh of relief because it does not affect your credit score as you are satisfying the agreement within your legal rights. However, it will be noted on your credit file but there is nothing to worry about it. No details are disclosed in the notes against this entry on the file. It does not affect your ability to claim any future credits. The only thing that will affect your credit score is if you have missed a payment or late payments appear on your account.
When you return the leased vehicle, it will require some paperwork. The processing starts a few weeks before the date of return. Your car’s mileage and condition will be inspected. The inspector will make note of any damages. If there is something wrong with the tires, you may have to replace them depending on the terms of the lease. You also have to fill out and sign the returned vehicle paperwork.
Luckily, there are alternatives to paying thousands of dollars in early termination by simply going for the option of lease transfer.
