Early Lease Termination
Also known as: Early Termination Fee, Lease Early Payoff, Breaking a Lease
Early lease termination is the act of ending a car lease before the contracted term expires. The penalty typically includes all remaining payments plus an early termination fee, making it one of the most expensive ways to exit a lease.
How Early Lease Termination Works
When you terminate a lease early, the leasing company calculates the early payoff amount, which usually includes: the remaining depreciation (difference between current payoff and residual value), any remaining finance charges, an early termination fee ($200-$500), and potentially the disposition fee. In many cases, you end up paying nearly as much as if you had kept the car for the full term. Better alternatives include lease transfer (having someone assume your lease), trading in the vehicle at a dealer (who pays off the lease), or in rare cases, negotiating a voluntary early termination with the leasing company.
Example
You have 12 months left on a 36-month lease at $450/month. Early termination cost: remaining payments ($5,400) + early termination fee ($400) + disposition fee ($350) = $6,150. A lease transfer would cost only the $300-$500 transfer fee.
Frequently Asked Questions
How much does it cost to terminate a car lease early?
Early termination typically costs close to the sum of all remaining monthly payments plus an early termination fee ($200-$500) and potentially the disposition fee. On a lease with 12 months remaining at $450/month, expect to pay $5,000-$6,500. The exact formula is in your lease contract.
What is the cheapest way to get out of a car lease early?
The cheapest options are: (1) transfer your lease to someone else ($300-$500 fee), (2) trade the vehicle to a dealer who will pay off the lease (works best if the car is worth more than the payoff), or (3) wait for manufacturer pull-ahead programs that waive the last 1-3 payments if you lease a new vehicle from them.
Can you negotiate an early lease termination?
The early termination penalty is defined in your contract and is generally not negotiable. However, some leasing companies may offer voluntary early termination programs with reduced penalties. Contact the leasing company directly — not the dealer — to ask about options.
Related Lease Terms
A lease transfer is the process of transferring your lease obligation to another person, who assumes all remaining payments and terms.
Lease Buyout PriceThe lease buyout price is the amount you can purchase the vehicle for at the end of the lease, typically equal to the residual value plus any remaining fees.
GAP InsuranceGAP insurance covers the difference between what you owe on a lease and what the vehicle is worth if it is totaled or stolen.
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