I Leased a car and now I want OUT. Help!

[rugbygirl93]

Hello friends,

I need help. Here's the quick background, I had a great little car all paid off and everything and then in July 2017 I got in a car wreck and totaled it. I received no insurance money and at the time I was just starting a new job and had barely enough to pay my bills so Craigslist, cash or even financing the vehicle were not options. Leasing was the cheapest way at the time and I couldn't afford not to drive. I am now at a point where I live close enough to bike to work and could pay cash for a small, used vehicle.

However, I have no idea how or if I should end my lease? I still have another 2.5 yrs in the lease. The buy out amount is $26K plus taxes. If I terminate the lease I am required to finish making the all the payments $305 per month and 30 months left in the lease = $9150 plus a termination fee of $3k.

Does anyone have any ideas? I was thinking about swapping the lease and financing the car to avoid penalties and at least that way I would end up purchasing the vehicle and could pay it off faster. Rather than ending up with no car in 3 yrs. Right now I don't have $26k to buy it out.

[slappy]

The terms of that lease seem pretty restrictive. But if your goal is to save money, I would say financing the car is not the way to go. The payment on $26k is certainly going to be more than $300.

[MrsDinero]

Do you have the money to pay the $9150 + termination fee and buy a used car with cash?

[Dicey]

Own your mistake. The value you receive from this lesson could save you a lot more in the course of your life. Rephrase this to something like, "I made a sub-optimal decision and I'll never do that again." Pay it as scheduled. Take good care of the car. Keep the mileage within the contractual limits. Start saving for your next vehicle and toward FIRE. Focus on learning the ways of the Mustache. In 2.5 years, you will be in a much better position.

[rugbygirl93]

I do not. I was just curious as to if anyone had a workaround that maybe I hadn't thought of yet. Thanks!

[terran]

If I'm understanding correctly it seems that getting out of the lease without keeping the car will cost you $3k more than just keeping the car until the end of the lease? Or you could buy the car now for $26k? In that case, keeping the lease is clearly better than terminating it (it costs less and you have a car). So the real question is whether you would buy this car for $26k - $9150 = $16850 if you didn't have a leased car already? If not you should just ride out the lease and figure out what you want to do at the end of it. I've never looked into leasing a car, so I might not be understanding the terms of the lease correctly.

[ReadySetMillionaire]

Since you don't need to drive it anymore, and presumably you can drive 12,000 miles per year, maybe keep it for the remainder of the lease and drive Uber to earn some money to pay for the lease payment? Maybe do 1-2 nights a week?

Also, bigger picture here and as someone else mentioned--don't beat yourself up too much. We all make suboptimal choices. It's about learning from it and using that knowledge to fine tune your well oiled machine.

[Zamboni]

That sucks, but seems like you may be stuck with it . . . enjoy having the new car, and try kicking another $100 or $200 into your "car fund" savings every month so that you can indeed by a sensible used car outright when the lease is up (if you even need one by then since you can bike to work.)

Let this be a lesson to us all:
1) In a pinch, even if you car is probably totaled, it got towed to a shop so next time ask the guy in the repair shop nicely for a free loaner . . . they've given me free loaner vehicles for up to two weeks. Wasn't a cadillac, but it had wheels. One time I got a Pontiac wagon of some sort (Pontiac was already gone at the time) and another time a different place gave me a Yaris. Sweet.
2) If you can't get a free loaner, then call up Thrifty and Enterprise and ask for their cheapest weekly rental. In many markets one can rent a car for $100 or $150 a week. Enterprise will even deliver the car to you! Put it on a card and by all mean WAIVE their optional insurance. WAIVE IT!

While a weekly rental car may seem wasteful, it is perfectly prudent because it gives you time to figure out options in an unexpected pinch.

[rugbygirl93]

@Zamboni, thank you for that feedback! That is an awesome idea, hopefully I don't total my car again but that is definitely worth it in a pinch while trying to find a more savvy route.

@ReadySetMillionaire A couple nights of Uber could be extremely useful as well to help offset the costs.

[omachi]

You're probably stuck with the car, but beyond being a lesson learned, you may be able to work the situation a little bit in your eventual favor. Leases are calculated based on how much of the value of the car the dealer expects you to use up by the end of the lease. Your buyout is $26k, so the expected value of the car at the end of the lease is that.

If you use the car sparingly and keep it in really good shape, you may find yourself with a car worth more than $26k at the end of your lease. This would let you either a) buy the car out then sell it and recoup a little of your money (a pain and taxes on that purchase might negate benefit), or b) possibly put that towards a new lease (nope!) or a purchase (maybe). If the dealer has some used cars on the cheap and is willing to work with you, you might be able to swing your excess value that way if you want a used car.

Though if you want to drive Uber, that would probably both get you money sooner and be a more efficient transfer of car value to your pocketbook. If the car isn't worth the buyout value, the dealer doesn't get to charge you more as long as you haven't violated any terms of your lease.

[Playing with Fire UK]

Any chance you have a friend or family member who has admired the car and would love nothing more than to take over the lease from you?

[MrsDinero]

I'm with everyone else that the best plan is to just keep the lease, save car money, and make a different decision when the time comes.  Learn from this "sub optimal" decision (love this phrase).
 You have a lot of time between now and then to really grow your stash and think about your next move.

[YoungGranny]

What's the car worth right now? Could you get approved for a car loan, buy it out and then sell it? Most leases have an option for an early buyout and with a fee attached however if you could sell it for a similar price you might be able to get out now and not set yourself back too far.

[meghan88]

What about getting out of the lease at one of these types of sites?

http://www.swapalease.com/
http://www.autoleasebreakers.com/

[Davids]

Keep the lease and learn from your mistake. What's done is done.

[robartsd]

I do not. I was just curious as to if anyone had a workaround that maybe I hadn't thought of yet. Thanks!

Other than something bad happening to you (the car is totaled, you become disabled, or you die), I doubt there's going to be any workaround that gets you out of your contract.

[Dave1442397]

What about getting out of the lease at one of these types of sites?

http://www.swapalease.com/
http://www.autoleasebreakers.com/

This. Even if you have a crappy lease, you may get someone to take it over at a subsidized (by you) rate just to get rid of it.

[Gronnie]

The buyout is $26k, what's the car worth (ie how much could you sell it for?) I doubt you are >$12k underwater, so buying out the lease and then selling the car would almost certainly be cheaper than terminating the lease.

[2Birds1Stone]

Total it, or let it get stolen.

Edit - not on purpose of course.

[jamesbond007]

Did you look into transferring the lease?