End Your Car Lease Early: Sell, Swap or Buy

You’re hardly driving anymore. But how do you turn in your leased car without losing a small fortune?

Because of the pandemic and the sagging economy, many people are asking this same question. The good news is that the once-rigid leasing process has become a bit more flexible thanks to new online information and resources. Before you decide which option to use, review your lease contract and collect this information:

• Your monthly payment.

• How many months are remaining in the lease.

• The amount of additional lease-end fees.

• The residual value — the cost to buy your vehicle at the end of the lease.

The total of lease-end fees and remaining monthly payments is a good estimate of what you would have to pay to terminate your lease early and walk away from your leased car. Better yet, call your leasing company to ask about both the cost of an early lease termination and the price of buying out the lease altogether.

You could simply turn in the car and write a check. Or, you could figure out what your car is worth on the open market.

Compare your buyout price to the current market value of your car on an online pricing guide such as TrueCar, Edmunds or Kelley Blue Book, or by getting a real cash offer from online car buyers like Carvana or Shift, or your local CarMax.

If you’re lucky, your car might be worth the same or more than the buyout price of the lease. If it isn’t, you’ll have to find a way to make up the difference.

Option 1: Sell your car to a dealer

This is the fastest and easiest way to step out of a lease agreement. And, because the pandemic has created a shortage of used cars, your car might be worth more than you expect. TrueCar’s Alain Nana-Sinkam, vice president of strategic initiatives, calls this “the happy path” because you can just hand over the keys and walk away with no further financial obligation.

Pickups and SUVs are in high demand now, in part because of low gas prices, and might fetch a higher price from a dealer. The value and desirability of sedans and other vehicle types will depend on the popularity and availability of those brands.

You’ll get your best price from a dealership selling the same brand of car you’re looking to unload, advises Nana-Sinkam. So take your Honda to a Honda dealership for the best price, along with your previous research on your car’s value as a gauge.

However, if your residual value was low and your payments high, you might still be on the hook for a lot of money. You may have to tap your savings. Or you might want to explore other options.

Option 2: Swap your lease

Most lease contracts allow you to transfer the remainder of the lease period to another person, says Scot Hall, executive vice president of Swapalease, a lease-trading site. Swapalease and its competitor, LeaseTrader, help you find someone who needs a car and can assume the remaining payments.

“We’re like a dating service for car leases,” Hall says. “Our primary goal is to match up a person who wants out with a person who wants to take over.”

For a fee starting between $75 and $100, you can post the terms of your vehicle’s lease on these sites. As part of the deal, experts from these sites make sure the paperwork is completed accurately. But before you take this route, be sure to check your lease contract to see if it allows transfer to another party.

In addition, you may have to put up some cash of your own to make your offer more attractive to shoppers looking to take over a lease. Not all leases on offer have incentives, but many do, in amounts from a month or two of payments to several thousand dollars for high-end models with whopper payments. Would you spend $500 to avoid making two years of $500 payments? Would you spend $1,000?

Another way to transfer your lease is to simply ask a family member or a trusted friend to take over the monthly payments. Make sure auto insurance still covers the vehicle, and have a clear understanding of who will pay for any excess wear and tear at the end of the lease.

Option 3: Buy your car, sell it yourself

Compare lease buyout options

Most lease contracts allow you to buy your car at any time during the leasing period for a predetermined amount — that early buyout price. You can either purchase the car with ready cash or take out a loan to cover the expense.

Many auto refinancing lenders offer lease buyout loans; some will lend amounts greater than the car’s book value.

Selling your car to a private party will bring a higher price than the trade-in or purchase figure from a dealer. However, it will require time and some money for advertising to find a buyer.

Option 4: Buy your car and keep it

Maybe you would like to keep your leased car if only your monthly payment were lower. In this case, you can use a lease buyout loan as well. The downside is that you would be extending your financial commitment to lower your payments.

Your leasing company may offer lease buyout financing, but if not, many auto refinancing lenders do as well. Some will loan you more than the car is worth, if your buyout price is higher.