Leasing a car is a great idea for many reasons. Not only is it cheaper than buying a comparable car, but you have the ability to drive something new every few years. If you decide to lease your car, it is important to know what options you will have when the contract comes to an end. Some people are under the impression that their only option is turning the car into the leasing company and re-leasing all over again. Of course, this is not true.
Here are several options to consider when your car lease ends:
1. Return the vehicle to the lessor and walk away. With this option, you can take the car to the dealer that leased it to you and walk away for good. For those who disliked their car, this is the number one option.
Note: When you do this, your car is going to be inspected with a fine tooth comb for any damage. You will be charged for anything that is not deemed to be “normal wear and tear.” This is one of the main drawbacks of leasing a vehicle and turning it in once the initial contract expires. Additionally, don’t forget about “mileage overage” fees.
2. Extend the lease agreement. Did you fall in love with your car, as well as the concept of leasing? If so, you may be able to extend the agreement on your current vehicle. To do this, you need to contact the lessor to discuss the details of the agreement. In most cases, you should be able to agree to an extended term for at least the same price that you have been paying.
3. Purchase the vehicle. If your lease comes to an end and you don’t want to get rid of your car, you have the ability to purchase it from the lessor. The buyout price should have been presented to you at the time of signing your initial agreement. If you are interested in owning your car, as opposed to extending the lease, you can either pay in cash or arrange for financing.
Example: A few years back I leased a car with a purchase price of roughly $22,000. After three years of paying on the lease, I was offered a buyout price of $12,500. Although I passed on this offer and opted to walk away, had I decided to purchase the vehicle, the monthly car payment would have been approximately the same as my previous lease payment. The main advantage to buying was that the title would be transferred to me, as opposed to the leasing company remaining as the owner.
Before you make the decision to buy your vehicle, compare the Kelley Blue Book price to the buyout price. This will give you a better idea of what kind of deal you can get.
4. Let your old lease expire and start a new lease. As noted in the opening paragraph, this is very common because many lessees believe it to be their only option. If you enjoy the benefits of leasing a car and are willing to do it again, this is the option that you should consider. Generally speaking, you will give your old car back to the lessor and choose another one from the lot. The main thing to remember is that you will have to negotiate a new lease for your new vehicle. In other words, you are not extending your past agreement.
5. Trade your lease to somebody else, before your contract is up. This is a relatively new idea, but one that is gaining a lot of steam. With this, you can get rid of your lease before it expires without having to pay a fee. To learn more about the options here, visit LeaseTrader and Swapalease.
If your car lease is coming to an end in the near future, expect to receive paperwork from your dealer or leasing company that details the options above as well as any others that are currently being offered. All of these options should be seriously considered as they each serve a different need depending on your financial situation and personal preference.
What route have you decided to go in the past when your lease expired?
(photo credit: KellyAutomotiveGroup)