Can you get out of a car lease early?
Yes, you can get out of a car lease early by buying out the lease and selling the car, rolling your payments into a new lease, or transferring the lease to another person. Terminating the lease also allows you to get out of it early, but doing so often comes with an early termination fee detailed in the lease agreement.
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How to break a car lease
There are several ways to break a car lease, and it's possible to break a car lease without incurring penalties. These strategies, however, do come with risks. Here are a couple ideas on how to break a car lease without penalties:
Buy out the lease and sell the car
Many lease contracts include a buyout option that allows you to purchase the car at the end of the lease or possibly even before then. If you're allowed to buy out the lease before it ends, you'll be responsible for paying fees and the residual value of the vehicle.
After purchasing the car, you can sell it privately or to a dealership to cover the remaining balance. Going this route does come with risk. If you sell the car for less than the residual value, you won't have enough to cover the difference without paying out of your own pocket. Learn more about if you should buy out your car lease.
Roll your payments into a new car lease
If you're planning to lease a new car after you get out of your current contract, you may be able to roll over your remaining lease payments into a new lease. This will increase the monthly payments on your new lease, and you may end up paying more than the new leased car is worth. Learn about car insurance for a leased car, and check out our leasing vs. buying a car calculator.
Transfer the car lease
Some leasing companies allow you to transfer your lease to another person. Read your contract to find out if your leasing company allows transfers. Transferring the lease is typically the most cost-effective way to get out of your lease, but you'll need to find someone to take it over. Online services, such as LeaseTrader and Swapalease, help people who want to get out of a lease find people who want to take over one. These sites charge a fee, but you'll typically pay a lot less to list your vehicle than you would to terminate your car lease.
When you transfer a lease to another person, they become legally responsible for making the payments for the remainder of the contract. Depending on the terms of the transfer, your responsibility might end when the lease transfers. However, some leasing companies may require you to serve as a co-signer on car insurance. If you're a co-signer, you may be responsible for the insurance payments if the new lessee doesn't make them.
What's the earliest you can return a leased car?
You can return a leased car at any time, but returning it early likely comes with significant costs. Depending on your lease agreement, you could be on the hook for the residual value of the car, early termination fees, and any other fees included in the agreement. Check your lease agreement and explore other options like lease transfers and early buyouts.
Does returning your car lease early impact insurance?
If you get out of your car lease early, notify your insurance provider. Update your policy to reflect your current situation, including providing details if you're driving a different car or canceling coverage if you aren't buying or leasing a different car.
Leasing companies typically require comprehensive coverage and collision coverage. If you're buying out the lease and keeping the car, review your policy to assess if that coverage fits your needs.
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