How to Terminate Your Car Lease

While leasing a car offers its advantages, you need to be clear about the terms and conditions of the lease agreement before signing it. Dealerships make it difficult for you to terminate a car lease early, so if you dont like the car or cant continue making the payments, you can't simply return the car and walk away. Returning a vehicle before the lease expires will have an effect on your credit.

Instructions

1

Find out what the car is worth. Check the Kelley Blue Book value, especially if youre thinking about buying the car outright when your lease ends. You can also get used car values from the National Automobile Dealers Association, known as NADA. If the payoff is less than the vehicles resale value, you can come out ahead by keeping the car. Otherwise, return the car to the dealership if the residual value is more than what the car is currently worth. The residual value is the car's estimated market value when the lease expires.

2

Wait to return the car to the dealer at the end of the lease. Even then, you may have to pay additional charges. The dealer can charge you more if he feels the cars condition is not as good as it should be. In addition, if youve exceeded the mileage cap, the dealer will charge you an amount per mile as spelled out in your lease contract.

3

Trade in your car lease. This is one option for terminating your current lease early. The dealer will pay the balance remaining on the lease and you get to drive off in a new car. However, Michael Kranitz, author of "Look Before You Lease: Secrets to Smart Vehicle Leasing," warns that the payments will be rolled over into the lease for your new car. Your new trade may come with a high monthly lease payment since you are also paying money you still owe on the old lease.

4

Turn over the car voluntarily before the lease is over. This isn't the best option, though, as defaulting on your car lease will damage your credit, making it tough to get new credit in the future. In fact, its going to appear on your credit report as a repossession. Depending on the terms of the lease contract you signed, you may still be responsible for making the remaining payments. The leasing company will also charge you an early termination fee, adding to the amount you already owe.