The cost of a good vehicle is quite high and, aside from your home, is one of the largest investments you make in your lifetime. Some people opt for leasing instead of paying upfront or buying. Leasing is similar to renting a car, in the sense that you pay a monthly fee for use of the vehicle, but the car is never actually yours. Unfortunately, if you are in a lease and change your mind, terminating your lease may be difficult.

Walking Away Early

If you want to terminate a lease early, you will need to try to get approval from the leasing company. This can have a damaging effect on your credit; when you walk away and return the vehicle, the company reports this on your credit report. To many banks and financial institutions, this is the equivalent of breaking a contract and not paying a loan or other types of bills that you legally owe. If this is your only option, contact the leasing or financing company, explain your situation and speak to the representative until you come to an agreement you can live with.

Trade In

In most cases, you can trade in your leased car early in order to lease another vehicle of your choice. This is often a better option than completely walking away from your leased vehicle because trading the car in early for a new leased vehicle does not go on your credit report and does not negatively affect your credit. However, this may affect your pocket from a financial standpoint because when you lease a vehicle, you sign a contract to pay a certain amount per month for a certain period of time. If the lease is not over for the current vehicle, the money you still have left to pay will be tacked on to the new lease amount. Therefore, if you are planning on swapping one leased vehicle for another, it is better to hold out until near the end of your current lease to avoid paying for both leased vehicles at the same time.

Other Options

Unfortunately, there are relatively few other options. If you simply stop making your payments, the company will eventually take the car but your credit will be destroyed and the leasing company will often send the account to collections in order to recover damages and fees. The best option may be to completely fulfill the obligations of the lease and, at the end of lease, determine if the value of your car is worth more than its resale value according to Kelley Blue Book or Edmunds. If the leased vehicle you have is worth more than the resale value, than you should finish out the lease, purchase the car for the agreed-upon price, and either keep the car or sell it for the price that it is worth. This will not affect your credit negatively, and you could end up getting a better financial deal in the long run than if you try to end your lease early.

Source:

LeaseGuide.com: Terminate

Bankrate.com: Advice