What is a car lease?
More and more people are realising the real benefit of leasing a car every year. The standard way of purchasing a car can include a large upfront fee and then monthly payments as well as maintenance and surprise bills.
This is where car leasing comes in. Right off the bat, the initial upfront fee (deposit) for a car lease, is much smaller than what you’d expect. The monthly payments are lower than regular car payments and normally, maintenance fees are included in the contract. As well as having lower fees across the board, leasing also gives you the opportunity to drive a new car every 2-3 years. Perfect for people who love that new car smell. After the 2-3 contract is up, the car is returned to the leasing company and you have the choice of getting another new car.
What is an early termination?
An early termination is when the customer would like to cancel their lease contract and send their leased car back earlier than their contract states. When sending a car back, the leasing company will calculate a returned fee based on many factors including time remaining, car condition and monthly payments.
These contracts are not normally broken so we would advise that you think carefully about prematurely ending a lease agreement as the penalties that can be allotted can be very high.
Why would you need an early termination?
The list of reasons behind needing an early termination can be so long. So many things can occur such as a change in personal circumstance like a redundancy or illness to the simple fact that you might not like the car anymore. Individuals have been known to payout the last few months of their contracts to take advantage of a new lease but these circumstances shouldn’t be jumped into without doing prior research. Just to reiterate, the cost of early termination can be incredibly costly so we advise you to study all options available to you and pick the best one for you.
Who can request an Early Termination?
Not every car lease contract gives you the opportunity to terminate your lease early so be sure to check your contract before looking at early termination options.
How much will it cost?
So like any contract, there is a financial penalty for ending the contract prematurely. The fee you will have to pay varies between leasing companies but be prepared to pay around 50% of outstanding fees. Some funders will look at things like length of remaining contract or mileage usage to determine the termination fee too.
What else can you do?
Lease Transfer– One of the options you can take advantage of is a lease transfer. If you would like to get out of your contract but do not want to pay a large fee, you can always try and find someone who could “buy” your lease off you. This means that the person would take over the contract for you and pay the monthly fees. They would also then “own” the car for the duration of the contract.
Repossession –If repayments are not met the funder or leasing company has the rights to repossess the car. You will also be liable for any outstanding payments from the contract.
Voluntary Surrender –To avoid the stress and anxiety that come with something like a repossession you can voluntarily surrender the car so that the funder will peacefully take the car back. You will still be liable for any outstanding payments.
How long is the termination process? The termination process normally changes from case to case and some leasing companies may have extra hoops or paperwork that need to be fulfilled so it’s hard to give a specific date. The average is normally up to 4 weeks but this can change.