Leasing vehicles have become very popular. You get to drive a new car every couple of years, and large down payments and car financing loans are not required. You get to return the car at the end of the lease with minimal costs unless there is damage beyond normal wear and tear or you have gone over your mileage limit.
Family cars and high-end cars can be leased. However, there are various options available to anyone leasing a car at the end of the lease and during a lease. Some drivers get tired of their vehicles, others run into financial problems, and they need to terminate the lease early.
There are a variety of approaches that can be considered. In this article you will find 8 options of what happens at the end of a car lease.
8 Options Of What Could Happen When Your Lease Ends
The eight options following provide a bit more detail about how to get out of a current lease early and what you can do at the end of a lease.
1. Evaluate a lease extension option
Most leasing companies are more than willing to extend the lease. Depending on the leasing company, you may be able to extend the lease on a month-to-month basis, 12 months, six months, or three months.
Payments should remain the same, and the mileage limits will continue. This is probably one of the easiest deals to arrange and can give you some breathing time to search for another vehicle to lease or purchase.
2. Trade in your vehicle for another lease
This approach can be one of the quickest ways to put yourself behind the wheel of another car. Ask your dealer for a quote on whatever car you are interested in to lease it and terminate the old lease.
The monthly lease, down payment, etc., will include all fees, early termination costs, balance transfer fees, etc. Also, any damages and excess mileage on the existing vehicle is added to the new lease.
3. Buy the current car your leasing
There is an option to purchase the car your leasing anytime during the lease. There may be lease buyouts with fees, any remaining costs of the lease, and the cars value. Call the lease company and make a request for them regarding what they would charge for you to purchase the vehicle.
You will probably need a loan to purchase the car, so factor any costs associated with the loan into your calculations. Once completed, you will own the vehicle free and clear.
4. Sell your current car for a profit
Someone nearing the end of their lease should review the residual value indicated on the contract. This is the buyout price you will pay to purchase the car. Some vehicles do not depreciate as quickly as anticipated by the dealer when the lease was first established, or you have low mileage, and the vehicle is in perfect condition. You may be able to sell your leased car for a profit.
5. Transfer the lease to another person
There are individuals interested in taking over an existing lease. They save money by not needing to provide the down payment, and you can stop making lease payments since they will take it over. Depending on the market and the car, you may need to negotiate how much you offer to the person taking over the lease.
They will need to be approved by your leasing company which means they have a good credit score and pass a credit check, and there are lease transfer fees that must be paid to the lease company, the bank, or the dealership.
Buyers with bad credit ratings should be avoided. These fees can be included in the negotiation. The license must be transferred, and all of the transfer paperwork must be filled in.
6. Buy a new vehicle and get a dealership buyout
If you are tired of leasing and want to purchase a new car, the dealer may be interested in cutting a deal to provide an incentive. They may waive some of the payments on the lease, reduce some of the fees or provide a better deal on the new vehicle.
The dealer you originally leased the existing car from will be incented to put a deal together to keep you as a customer and move some of their vehicles on their lot.
7. Get a lease pull-ahead from your leasing company
A lease pull ahead occurs when a dealership waives the final three payments on an existing lease if you are leasing a new vehicle with them. They use the lease pull ahead approach to keep you as a customer. They also get to move vehicles off their lots. The car your returning is sold at an auction or on a used car lot.
8. Return the lease early without buying a car
Lease termination earlier than stipulated by the contract may be one of the most expensive ways to get out of an existing lease. You will be required to pay the remainder of the fees, penalties, and interest charges to get out of the lease.
Compare the cost of continuing the lease to its natural termination vs. the cost of terminating the lease. Continuing with the lease may be your best option depending on the turnin fees.
Prepare Your Auto for The End of the Lease
At the end of the auto lease, you may be either selling the lease or returning the car to the leasing company. Either way, drivers of leased cars should take steps to protect themselves from additional surprise expenses.
If you are selling your car or the lease, you want the car to look the absolute best it can. Make sure it is washed and looks immaculate inside and out. If there are any dings or scratches, you may want to have them fixed to ensure you obtain the maximum value.
Returning the car to the leasing company is much the same, although you are guaranteed the residual value. The returning lease company will inspect the car. They look for high mileage, tires warn beyond normal, and any damage. They may deduct the cost of repairs from your residual, depending on how serious the damage is.
Leasing vs. Buying the car
Whether you lease or decide to buy a car depends on your driving habits, financial cash flow, and desire to drive a new car every few years. Buying a car usually includes a down payment and a car loan.
The amount of the monthly payments depends on the interest loan rate, the price plus fees and sales taxes on the car, and the interest rate. When you pay off the personal loan, the car is yours, and you have the equity in the car to trade for a new car.
Leasing a car is often less expensive monthly than an auto loan. The payments depend on the interest rate, the value of the car plus fees and taxes, and the loss in value throughout the lease.
You do not have any equity in the car, and you get to drive a new car every few years, which is covered by warranty. While all of this seems complicated, a payment calculator can make it simpler to make the decisions.
Do the math for your situation to see which option is best for your lifestyle and budget.
What are your options at the end of a car lease?
As long as your car is damage-free, the mileage is under the mileage allowance, and drivers can turn over the car to the dealership or lease company. Don’t forget to obtain a clearance certificate indicating the car lease has been transferred so that you are free and clear of any obligations.
There are other options available at the end of a lease. For example, some drivers will want to take out a new lease on another car, and some will want to purchase a new car, while others will purchase the car they have leased for the past few years.
You can also extend the existing lease. Each of these options is available, and drivers should be prepared to negotiate with the dealership. It is in their best interest to keep you as a customer.
Is it worth buying a car at the end of a lease?
It can be worth buying your leased car at the end of a lease under specific conditions. Every lease has a residual value, which is the cost for you to purchase the car at the end of the lease, plus processing disposition fees and taxes. The residual value was an estimate of what the car is worth at the end of the lease, taking into consideration normal use, depreciation, and repairs that are needed.
A well-maintained leased car, with new tires, and brakes, a car with low mileage could be worth more on the used car market than the residual value stated on the contract. Potential buyers must determine what the car trade-in value is for their car. Then they decide whether to buy the car at the end of the lease or turn it back. Both car buying and leasing a new car at the end of a lease have benefits.
Who owns the car at the end of a lease?
Typically, it is the leasing company that owns the car during the lease and at the end of the lease. The dealership where you picked up the car sells the car to the leasing company. The finance company, in turn, is allowing you to operate and maintain the car as if you had purchased it.
The person leasing the car is responsible for the lease payments and all of the routine maintenance that is required to keep a vehicle well maintained. This includes oil changes, brakes, and tires, while other items usually fall under warranty. Leases also require proof of car insurance from an insurance company.
Do you get money back at the end of a car lease?
The short answer is “No.” If you turn your car in at the end of the lease and it passes inspection, i.e., no damage or unusual wear, then you walk away from the lease and move on to some other vehicle.
However, there are situations where the market value or the trade-in value of your leased vehicle is higher than the residual value on your lease contract. The difference can be used to negotiate a better lease deal on another car or as a better trade-in value on a car you may want to purchase. While you may not receive cash, your subsequent monthly payments for either a lease or purchase car deals, which could be less.
What are your options at the end of a car lease?
There are multiple options at the end of the lease. Assuming average wear on the vehicle with no damage, leased vehicles can be:
- Returned at the end of a lease
- Returned early to take advantage of lease-up deals, i.e., leasing another vehicle
- Used as a trade in to purchase another vehicle
- Purchase the car from the leasing company to drive
- Purchase the car from the leasing company and selling the car
The market value of the vehicle as a trade-in, your plans to buy or purchase another car, or because you like the vehicle all play a part in the decision regarding which option you select at the end of the lease.
Compare car prices and options before making a decision. Kelley Blue Book can provide some information on current prices. Excessive wear can lower the trade-in value and also trigger a damage charge. The actual value will be close to the ones provided on the site.
You can also look into buying a car online. My wife was looking online for different options until she found her pick. It was a close race between the Land Rover and the Alfa Romeo brand.
Leasing new cars have become very popular over the last few years, with over 30% of cars sold under lease contracts. Demographics also play a part in who leases a car. Remember that when buying a car, you will probably end up having to pay sales tax.
Younger people and older people tend to lease cars, while people in their middle years tend to purchase vehicles. A leased car provides a new vehicle every couple of years, under warranty with all of the latest conveniences.
There are options for terminating a lease early as well as at the end of the lease. They make financial sense for many people depending on their lifestyle choices, likes, and dislikes. If you trade the car for a new lease or buying a car, it can be worth your while if the value of your vehicle is greater than the value of the residual.
A leased car must be returned in good condition showing normal wear and tear within the mileage limits identified on the contract.