In almost every case, you can certainly turn in your leased vehicle early. Whether you buy or lease from the same dealership after is up to you. What you need to know before making your decision is if there's a penalty for early lease termination. Here's what we know about early lease trade-in.
Turning in Your Leased Car Early
Know that penalties are possible. When you choose to turn in a leased car early there may be a number of penalties you face. How many penalties and how much you're charged if fees vary by leasing company and state, so be sure to get these facts beforehand by checking your lease contract.
Penalties may include an early termination fee, having to pay the remainder of your lease payments upon vehicle turn-in, or having to pay the difference between what you owe on the lease and the value of the car if there's negative equity. It's also possible that you may have to pay storage or transportation fees, foot the bill to have the vehicle prepared for sale, or pay any applicable taxes that haven’t been paid.
Just because penalties might be charged doesn't mean you should give up on turning in your leased car early, especially if you plan to purchase a new vehicle from the same dealer. In fact, some companies even offer incentives for early lease turn-in if you're planning to buy or lease again. Check with your dealership to see if there are offers available that you can take advantage of in this case.
Options for Early Lease Termination
More than one option at lease end. Did you know that returning your vehicle to the dealer you leased from isn't the only option when ending your lease? The important thing to remember is that your lease must be completed, or the car must be purchased if you're planning on taking other routes.
Other options you have for ending a lease early:
- Trade-in your leased vehicle: If your goal is to purchase a different car from the same dealership, you can always contact the dealer and see if there are any incentives available to roll your lease balance into the purchase of another vehicle.
- Transfer the car lease to someone else: You can find a buyer on your own, or use an online "lease swap" company to transfer the remainder of the lease to another person. Keep in mind this isn't allowed in all states, and the buyer you find has to qualify for the lease. So, make sure you check with your leasing company and local DMV or Secretary of State before you sign anything over to someone else.
- Buyout the leased vehicle: Even if you want to purchase another car, getting an early lease buyout may be worth your while if there's equity in the vehicle and you can afford it. You avoid excess wear and tear and mileage charges this way, and can do as you please with the car once it's yours, including trading it in for another vehicle.
- Sell the vehicle privately: If you can sell the car privately for enough to pay off the buyout amount, you can go for this as well. Keep in mind, though, that if the buyout amount is high, it can be more difficult to turn a profit, making this option less worthwhile.
Purchasing a Vehicle
Buying instead of leasing. You can typically purchase a vehicle from the same dealership you've leased from, so long as your lease is completed. Whether or not you terminate your lease early is up to you, and usually so is what you decide to do next. If the car you're leasing isn't the one for you, you typically don't have long to wait to get into something else since most leases are only two to three years.
Rate shopping can help. If you're planning on purchasing instead of leasing know what your options are and rate shop before you jump into financing. It may seem easiest to stick with the same dealership, and sometimes a dealership's captive lenders will compete with the rates you may get through a bank or credit union. However, with cars in short supply and many vehicles going for markup prices you may get a better deal through a different lender. Rate shopping can help you find the lowest rates if you apply for the same type of loan within a two-week period.
Deals may be sparse. Additionally, know that buying right now may not get you the same deals as you're getting by leasing a vehicle. With the industry suffering from inventory restrictions due to the chip shortage and supply chain issues, it could be a long wait to get into a new car. This means turning in your leased vehicle early may leave you high and dry. Be sure to talk to the dealership and see what your individual options are from moving out of a lease early and getting into a vehicle purchase.