What To Do When Your Car Lease Ends?
Let’s talk about what happens when the lease is ending or if you plan to cancel it before the lease expires.
Global Leasing Alliance will give you some pro tips that can help you with what to do when your car lease ends. To get started, consider your options, each with its own processes, expenses, and challenges.
- You can continue with a new lease for a new vehicle.
- You can buy the car you’ve been leasing.
- You can sell your car and start over; maybe buy instead of lease.
Lease Another Car
This works best if you are getting a new car of the same make as your current car. A few months before your current lease ends, you might get what’s called the “lease pull-ahead” offer, a type of incentive for you to lease another, says Ronald Montoya, senior editor of consumer advice at Edmunds, an automotive research company.
In your case, Mazda offered you $ 1,000 of credit to use toward your lease renewal if you leased another Mazda. You say you had the option of using that amount to make your final lease payment (s) or to use it toward your lease installment installments, typically $ 400 or $ 500.
If you receive such an offer and use it for the last month of your current lease, it could be enough to make the last payment and to pay the delivery fees, Montoya says.
Most early renewals allow you to get out of the contract and start over two to three months early. In some cases, they even waive the penalties for excess mileage and excess wear and tear if you are willing to sign a new lease for the same make of vehicle.
Sometimes you can combine early renewal with other incentives. You could get out of the contract three months in advance, avoid an excess mileage fee that seems imminent, and have some cash as an incentive to use it on your next deal, whether it’s a lease or a purchase.
But the total value of the early renewal may be limited, as in the Montoya $ 1,000 example.
Automakers advertise their early renewal offers, primarily on sites called “configurator” or “build-and-price” under “shopping tools.”
Buy What You’ve Been Driving
You treated him well and he has not given you problems. Otherwise, you are not thinking of buying it.
But the total you would have to pay to drive out in the car you have come to know could cost you more than buying a similar model you find on a used car lot.
Your lease documents will tell you what you would have to pay at the end of the lease to buy your car. If the formula is not very clear, call the leasing company and ask.
Next, research how much the same car with similar miles and similar conditions would cost on the open market.
“If you have taken good care of it, it has few miles and has good resale value, then a place like CarMax (a chain of used car dealers) is willing to be very good on the price,” says Montoya.
But don’t be surprised if buying your car would be a bad decision. Typically, automakers subsidize the lease, which can occur by inflating the value at the end of the lease – the delivery or residual value – as a way to lower your lease payments and make the original lease deal more attractive.
It’s an incentive, but without the stigma of auction sales where you scream, “$ 5,000 off!” in big headlines or television commercials.
Most leases are for three years, and a 3-year vehicle is generally not worth much more than half its value as new. Your 3-year-old car could have depreciated only 42%, retaining 58% of its value as new, according to the Omni Calculator’s car depreciation calculator.
Or, if it’s a fast-depreciating car, it could be down 50% in three years, according to AutoGuide.com.
You can get an idea of the car’s value in the used car sections at Edmunds.com, Kelley Blue Book’s kbb.com, Cars.com, Truecar.com, and other websites.
If the price you see on your lease documentation is less than what you consistently find on the open market, maybe buying your car is a good deal. If your car is priced higher than the market, that’s not so good.
It is true that it is more difficult to buy from car lots, and you know less about how they treated a used car, but strictly speaking of money, it could be a better proposition.
Return And Use Public Transport
You cannot park your leased vehicle at the agency and leave your keys under the carpet and say goodbye.
Until you sign the paperwork, the car is inspected for damage that the leasing company considers more than normal, you pay for that excess damage, and the delivery fee, you are still responsible for the car. But once all of that is done, you can walk, use your bike, take public transportation, go by taxi or shuttle services with local drivers, or ask family or friends for a ride.
Keep in mind that you can inspect it yourself, using the inspector specified by the leasing company. The inspector will sometimes go to the address where you are, says Montoya.
If any excess damage is minimal, you may want to have it fixed yourself, re-inspected, and delivered without fear of a damage charge.
Before you run out of a car, you will need to know how tolerant those family and friends have, and how often you need to get from point “A” to point “B” far away. You may have to shell out a lot when hiring a car to take you to your destination.
But if it’s temporary – maybe you want a new car soon but haven’t made up your mind yet – interim methods might work.
Cancel Ahead Of Time
You love the color, the engine, the seats, but you can’t stand the styling or the sound system, or the number of recalls the manufacturer seems to issue.
You decide that you have made a mistake.
If you simply stop paying, it’s like defaulting on a loan. The leasing company can repossess your car, you can be charged hefty fees, and your credit rating can suffer.
Check with your leasing company and your state Department of Motor Vehicles to see if you can transfer the lease to someone else – perhaps a friend or family member, or a prospect you found through social media or advertisements – and which one. it would be the cost and the procedures.
The person taking over the lease will have to go through a credit check to be approved, and you will have to work with your insurance company so that the new person has coverage.
If that’s too much for you, there are some websites that can help.
If the ending lease is the first one you made, you likely traded in a vehicle to help keep your lease payments low. But, if you don’t have a car to trade-in, you will be asked for the equivalent of a deposit; a fee to “go driving.”