Car Lease Termination: How to Avoid Penalties

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November 9, 2016

Many drivers avoid early car lease termination due to the penalties involved, which can often be abated by lease swaps and lease assumption groups.

In the event you wish to get out of your lease early, car lease termination is an option. The downside of early termination is that you may end up paying a penalty.

To avoid a penalty for terminating your lease early, educate yourself about your options and look closely at the contract. Know exactly what charges you will be held liable for. In order to avoid the penalties, you really only have 2 options: leasing a new vehicle or a lease swap.

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New Vehicle Lease
The first option involves leasing another vehicle. You can simply return your leased vehicle to the dealer early if you wish, but you will still be obligated to make the monthly lease payments. If that is not penalty enough, if you decide to stop making the payments, your credit rating will be adversely affected. By trading up, so to speak, for a new lease, you roll over your current lease into the new one. Here's the catch, though. If you still owe more than the car is worth, the difference will be tacked onto the new lease, increasing your monthly payment. Additionally, you might be assessed new lease charges as well, so your best bet is to make a lease swap.

Lease Swap
A lease swap involves finding another party who is willing to take over the lease of your vehicle. If the lease company allows it, it works in both your and the other party's favor. They avoid having to make a costly down payment, and you get out of your lease early without being penalized.

Transferring a lease is a legal procedure, so there are things you need to consider to make certain that it all takes place smoothly. First, be certain that the person taking up the lease has good credit. It is possible that if the person assuming the lease does not make a payment, you may be responsible. Second, does your lease company allow a transfer? Third, you need to find out if you will be responsible for anything after the transfer.

80 percent of leases can be transferred, and the shift can take place with no real hassles. However, 10 percent of leases, especially those made by Nissan/Infiniti and Honda/Acura, may require you to retain some responsibility even after the transfer. Moreover, companies that offer leases in this category may allow or disallow a transfer based on where you live. And then there are another 10 percent of lease companies that don't allow a transfer at all. These companies are commonly banks or small credit unions. You will, of course, have to find a person interested enough in the car to take it over.

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Lease Assumption Groups
In recent years, a new phenomenon has found its way onto the Internet that is a very helpful for those who want to get out of a car lease. They are what are called "lease assumption" groups. These groups have websites where you can go and seek out someone to take over your lease. These sites sign up members, some of whom want to assume a lease and some of whom want to get out of a lease. Then the site matches the two. Three leading sites that perform this are, Swapalease and

Of course, transferring your lease cannot be done for free. There is a cost involved. Prices vary among the various sites and you also have to pay a fee to the leasing company. But in most cases, most of the costs owed to the leasing company are the responsibility of the person who is taking over the lease.

Avoiding fees for the early termination of a lease can be tricky, but it can be done. It won't do to simply return the car early or stop making payments--in both of those cases you will be charged. Take some time to investigate your options before you make any decision, and you will be better prepared for the task ahead.

Related Questions and Answers

What is the Average Fee for a Car Lease Early Termination?

A car lease early termination is complicated. A vehicle lease is a legal contract and the leasing company will expect you to fulfill your end of the bargain. Terminating a lease early is not easy and can be quite expensive. The leasing company will want you to buy out the remaining lease payments or purchase the car. There are companies that can help you find someone to take over your lease. There will be fees involved and there is no guarantee you will find a person to take over your lease payments. One other option is to lease a less expensive vehicle. A car dealer will often do whatever they can to help you terminate a lease early if they can put you in a new vehicle.

Is a Car Lease Takeover the Same as an Auto Lease Swap?

Yes, a car lease takeover is basically the same thing as an auto lease swap. While a lease takeover and swap are technically two different things, the terms are often used interchangeably. A car lease takeover simply means that a person wants to get out of their current lease and lets an interested third party to take over the lease and its payments. There are numerous companies that help people get out of their lease. Swapping a lease technically means that two people swap their leases, but in many cases it is the same as a lease takeover.

Is a Lease Early Termination Letter Required for Canceling a Car Lease?

A lease early termination letter will be required if you are trying to get out of your lease early. A request in writing will be a first step. Early termination of a lease is not an easy process. A lease is a legal contract, and terminating early will be an expensive proposition. The majority of leasing companies will require you to buy out the remaining lease payments or purchase the vehicle. You can use the services of a company like Swapalease, which can help you find a person to take over your lease payments. These companies will have fees associated with them, but they can be a lifesaver if you need to get out of your lease.

Is there any Required Paperwork for Returning a Leased Vehicle?

Returning a leased vehicle usually requires quite a bit of paperwork. The paperwork required for returning a leased vehicle starts a few weeks before the return date. An inspector will come out to check the mileage of the vehicle as well as the condition. They will make note of any damage to the vehicle. The condition of the tires will be noted. Depending on the terms of your lease, you may have to replace the tires and have any damage to the car repaired. When the vehicle has been repaired, it is returned to the dealership. There will be returned vehicle paperwork that needs to be filled out and signed. Returning a leased vehicle to the dealership can take up to an hour, so plan accordingly.


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