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Break A Car Lease

Car leasing, the Army and marriage have one thing in common: all of them are much easier to get into than out of. As you might have guessed, if you want to break a car lease you should know that it isn’t as easy as getting into one. Quitting such a lease means that you will be backing out of an original signed agreement that provided low (or not) payments over a fixed number of years.

The simplest and most expensive way to get rid of the lease would be to return the car to the company and pay what you still owe, which in many cases can be quite substantial.  Not the best way to end all the problems, but it still is an alternative.  We say not the best way mainly because what you owe for the lease can be much more than you have anticipated in the first place, because many of these financial institutions will charge you extra due to the early termination costs. There is a misconception going around right now that getting rid of the lease means just only returning the car and paying a rather insignificant penalty fee. Well, it’s wrong – there is more to it as the actual cost of early lease termination can set you back a couple of thousand dollars, depending on how much you still owe.

By far the best way to get rid of a car lease would be to transfer it. Why is it the best you ask? Because it is pretty simple to do it, there are no penalties or payoffs included. However, you will have to pay some transfer fees, but this is the price you have to pay – under $1,000. The most important advantage of lease transferring is the fact that it will not affect your credit score. There is a catch here also; some of these companies will not allow you to transfer the car lease. In addition, the lessee will have to get approval from the financial institution.

The car dealers that allow you to “trade-in” your lease will most likely add the pre-payment fees to the new lease which means that you will still be paying these fees plus the afferent interest. Due to the fact that these leases are issued through financial institutions, these trade-ins are still considered an early termination of the lease.

According to an article written on Edmunds, about 80% of the car leases are transferable without any implications involved. Another 10% are possible with only one string attached, which is pretty important as the person that hands over the lease will still remain at least partially liable. The remaining 10% do not allow such transfers at all.

It is best to avoid dumping a car lease if you are going to remain liable and it is a complete waste of time to list the vehicle if you cannot transfer it. And even in the situation, in which the lease is assumable, remember that the person who will be taking over the lease still must qualify and be approved in advance by the financial institution.

If you want to break a car lease, you need to make the contract attractive to the potential buyers. However, you may also have to “buy down” the payments. Here is an example, if you have 12 remaining payments, each consisting of $500, in order to make the car more desirable you could put up $1,200 to effectively bring the monthly payments down to $400.

On the Internet there are many lease-swapping sites that will offer you all the necessary services like vehicle inspection and history, credit pre-qualification and car shipping. However, if you are in a rush and want to break the lease as soon as possible, transferring it remains the best way to go by. In addition, if you care about your credit score and you want to maintain the same level as before, lease transferring is the only way to avoid ruining it.

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