Ok. You now realize you shouldn’t have done that car lease. What can you do about it?
Well, there are a number of things. First of all, you need to identify what changed. Why do you want out? Did you come to your senses and realize that a car lease (or Fleece as Dave Ramsey calls it) is probably the worst financial move a person could make? An unevaluated life is not worth living. That is a quote I have heard, not sure who said it, but it is oh so true. When we make mistakes in life, we have to learn from them. Own up to them. Don’t blame everybody else. So you learned your lesson. No more leasing!
Now on to what you can do.
The costs of ending a lease early are usually very, very steep. You should get out your contract and see what options you have. If you are within a year or so from the end and you aren’t over too much on mileage, it may be best to ride it out. Not paying the lease will get you into so much trouble, credit wise, it simply isn’t an option. And no, you can’t just tell them to come get the car. They might come get the car, but you will still owe the balance and that would be worse than keeping it. You should do everything you possibly can to make your scheduled payments through the end of your leasing term.
So if waiting it out is not an option, here are some suggestions.
1. Call the company and ask for a buy out price. They will compute the cost to sell you the car today. This will include the rest of the payments and the “residual value” of the car at that time. It will likely cause you to have a panic attack, but it is an option. You can negotiate some of this by asking what part of the price is considered the residual value. Then go to Edmunds.com or some place similar and see how other cars like yours are valued. For example, if your leasing company says your cars’ residual value is 10,000, yet cars just like yours have a fair market value of 8000, you can negotiate some. The closer you are to the lease being over, the more you can negotiate, because the company really doesn’t want the car back anyway. Once you get the best price you can, in writing, you can determine if this is an option.. What I am suggesting is you borrow the money at your local credit union to buy the car, then you sell the car, then you pay the local credit union everything you get out of the sale, then you pay the remaining amount to the credit union in monthly payments. In other words, you aren’t going to get out of this without some pain. It will be far less in the long run, to pay a $3000 to $5000 loan off at the credit union, than to have your entire credit history trashed by not paying for this car. I wish there was better news.
One comment about the Edmunds site I listed above. I was reading some of their advice areas, and I disagree with most of their advice concerning leasing cars. At one point they say you can make money at the end of the lease, by selling your car.. Very doubtful that will ever happen. Just go through the numbers and you’ll see. I would guess 95% of people leasing, would lose money doing that.
2. You can get someone to assume your lease. In other words, you find someone who wants your car and is willing to take over the lease. The leasing company has to be agreeable to this and will usually charge a fee of $300 or more to do it. If you find someone credit worthy, the company will most likely allow it. The problem is, who wants to take over your car? Actually, I found a few companies out there specializing in “helping” you find someone to assume your lease.
3. Last option would be to just walk away from the car and payments. As I said earlier, that is the worst possible case. Your credit will be trashed. It will show up as a “repossession” on your credit report. That will cause you to have to pay much higher interest rates for almost any loan in your future for the next 7 years. Find another way.
Finally when you are over this, learn the lesson. I suggest saving money to buy the car you want, and in the mean time, buy a used car. You can get a $2000 – $3000 car, and put your $500 lease payment in a savings account.
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