Terminate car lease early
Can you end a car lease early?
Yes, but it can be costly. A lease can end early for many reasons, such as a job change, a move, financial hardship, a total loss, or theft. Your lease contract must state the conditions for early termination and the amount, or the method used to calculate, any early termination charge. The charge can be substantial, especially early in the term. Read your lease agreement and ask the leasing company for a payoff quote before you decide.
What happens to a lease after the lessee's death depends on the lease contract and state law. Contact the leasing company as soon as possible to learn which options are available.
What happens if the car is stolen or totaled?
The leasing company compares your lease payoff amount with your insurance settlement. Often the payoff is higher, leaving a gap you may owe. Many lessors offer GAP coverage that can reduce or eliminate that amount, so check whether yours is included. You may need to keep making payments until the insurance proceeds arrive, and you are usually responsible for your insurance deductible.
Your options for ending a lease early
Termination agreement
Return the car. You return the vehicle to the leasing company and pay any early termination charges.
Leasing takeover
Transfer the lease. Some leasing companies allow another person to take over your lease. This requires the leasing company's approval, the new lessee usually has to meet the same credit standards, and you may remain responsible for the lease. Transfers are restricted in some states. Be cautious with companies that charge a fee to find a taker and tell you not to inform the leasing company.
Vehicle change
Trade it in. You can trade the vehicle in to a dealership or leasing company. If the car is worth more than your payoff, you can apply the difference to your next vehicle or receive it. If there is a shortfall, you are responsible for it.
Costs and financial consequences of early termination
The early termination charge is typically the difference between your remaining lease balance and the credit you receive for the vehicle, usually its wholesale value. Disposition fees, taxes, and past-due amounts may also apply. The earlier you end the lease, the higher the charge tends to be, and it can reach several thousand dollars.
Car subscription as an alternative to leasing
Discover the SIXT+ car subscription as a flexible alternative to classic leasing. Monthly cancelable, without long-term obligations and at a fixed price.
Advantages of a car subscription over leasing
More flexibility
Ending a lease early is possible but usually expensive. With a SIXT+ car subscription, you can end your subscription by returning the vehicle after the 30-day minimum term, and you can pause for up to 90 days. This is an advantage for private individuals and companies with employees in their probationary period as well as start-ups.
Short runtime
Leasing contracts usually start with a contract term of 24 months. The car subscription makes it possible to get out after just a few months without any long-term obligations. The minimum term of the SIXT+ Auto Abo is 30 days.
Secure planning
Standard maintenance is included in your SIXT+ monthly rate. You choose your protection level when you configure your subscription, and you can bring your own insurance if it meets SIXT's requirements.
Frequently asked questions about terminating a leasing contract prematurely
What costs are incurred for the early termination of a leasing contract?
Early termination of a leasing contract typically incurs a termination fee and compensation payments. While the leasing contract often provides for high costs, the leasing bank sometimes offers the possibility of reducing the expenses under certain conditions. If extraordinary termination is necessary, the lessor can also claim compensation for the depreciation of the vehicle.
In addition to the outstanding lease payments that are due until the end of the term or until extraordinary termination, further costs may be incurred.
What happens if the vehicle is damaged or the residual value is lower?
If the leased car has significant damage or the residual value falls below the expected value, the lessee may be faced with claims for damages from the leasing company. The leased asset is valued on the basis of its current condition and any reduction in value is offset against the originally agreed repurchase value.
Can the leasing contract be transferred to another person?
The transfer of a leasing contract is generally possible, but requires the consent of the leasing company. This option can be particularly attractive in order to get out of the leasing contract early without bearing the full financial burden. The lessor's consent is crucial and can often be obtained by the new lessee assuming the remaining obligations.
Missing payments can lead to late fees, damage to your credit, and in some cases legal action or repossession. Failing to pay is treated as an early termination, so early termination charges may apply. Contact your leasing company early to ask about your options. If you believe you are being treated unfairly, you can submit a complaint to the Consumer Financial Protection Bureau (CFPB).
Sixt+ car subscription
This page provides general information and is not legal or financial advice. Your lease contract and state law determine your rights and obligations.