Need to get out of a Car Lease early?
Car Leasing is a great way to drive the car of your dreams at a lower outlay and lower payments when compared to purchasing a vehicle. It is convenient, cost-effective and hassle-free, enabling easy budgeting of your motoring costs.
But what happens if your circumstances change part way through the lease period and you need to get out of your car lease contract? It is possible to terminate your Car Lease early, but there may be costs involved.
Why you would want to get out of a Car Lease Contract
There are many reasons why people might want to get out of a Car Lease, as we don’t know what the future may bring:-
- Change in financial circumstances – your income may have reduced/increased
- Change of job – loss of job, got a new job, been offered a company car
- Change of lifestyle – you now need a different type of vehicle
- Need a different sized vehicle due to change in family size
- Starting a new business (or closing your business down)
- Car leased for an employee who is leaving and not being replaced
- No longer require a car – relocating or emigrating
So how do I get out of a Car Lease?
Well, no matter what other people may tell you, it’s not that easy!
After all, a Car Lease is a legally binding agreement which you have entered into for a period of usually 2 or 3 years, during which time the finance company expects to receive a certain amount of money in monthly payments based on their estimate of what the value of your car will be at the end of the term. If you want to break the lease and return the car, you are likely to face Early Termination charges which, depending on how much of the lease is still to run, could be as much as a few thousand pounds.
There are really only 2 ways to get out of your Car Lease Contract:-
- Find someone willing to take over the payments on your lease agreement, or
- Hand the car back to the finance company and pay the Early Termination fee
The process for transferring a Car Lease
The first thing you should do is check your Car Lease Agreement and, if necessary, speak to the finance company, to see if there is anything in the contract which prevents you from transferring a Car Lease to another person or company. Most finance companies will allow transfers to take place, subject to the person who wishes to take over the lease passing their credit check, and a Transfer Fee being paid.
Once you find a suitable person who wishes to take over the lease, simply inform the finance company who will carry out their checks and raise the necessary documentation.
Factors to consider when transferring a Car Lease
- Make sure the vehicle conforms to the Fair Wear and Tear conditions of the finance company before transfer, as anyone taking over the lease will not want to pay for any damage you have caused
- You may have to pay the Transfer Fee yourself and may also have to offer the person taking over the lease a cash incentive, as even this would be much cheaper than if you had to pay an Early Termination fee
- The lower the mileage and the more mileage left to run on the contract, the easier it will be to find someone willing to take over the lease
Benefits of taking over a Car Lease?
Taking over someone else’s Car Lease is an inexpensive way of acquiring a nearly new vehicle, as there is no initial payment or set-up fee to make and you just start paying the monthly rentals.
Furthermore, your commitment is less as you are signing up for a shorter term contract.
Breach Of Contract
Finally, if you can’t find a suitable person to take over your Car Lease, it may be tempting to simply hand back the car and stop making the monthly payments. Under no circumstances should you do this, as the finance company will seek to recoup its losses, may sue for breach of contract, and have you pursued by a debt collection agency, all of which will severely limit your chances of getting credit in the future.
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