Early termination of auto lease

[Anonymous]

I am thinking of terminating the lease on my car early as part of my overall plan of getting a healthy financial life! My question: Does anybody know what effect, if any,  a early termination has on credit scores. I have been working really hard to keep my scores up so I don't want to do anything that would negatively affect it.

Appreciate the feedback.

[cdtotten]

As long as you pay your leasing company the required amount, then it won't effect your credit. However, have you looked at the cost to terminate your lease. At a minimum, the amount will be the remaining payments do on the car + the early termination fee, which can be outragious (on 1 lease I had a $3k early termination fee). There's rarely a time where terminating your lease is a good option.

Your best bet though is to contact a lease transfer company if you truly want to get out of it. They will try to find someone who will assume the remaining portion of your lease for you. I haven't used one before and can't speak much about them, but I do know they exist.

Breaking a lease is not a pain free process no matter what you do.

[Anonymous]

Thank you for your reply. You are 110% correct! I spoke to the finance company this morning and it is beyond outrageous!  I am ok with the lease payment. I was just looking to maybe lower it and thus increase my savings potential each month. I am trying to work on that 3 month emergency fund!  . I am looking into changing the lease into a purchase. At the very leaset, even if the payment is the same, the car is mine at the end!

[cdtotten]

How much is the car worth and how much do you owe for a payoff amount? Your best bet, if you are not upside down, may be to contact your local credit union. You can usually get the best rates through them, and you can finance the car over a longer time (lowering your payments).

I would be careful though; it sounds like you are in over your head on this car. Financing it out 4-5 years is gonna make you even more upside down in it. If you can't afford a lease, you definitely can't afford a purchase.

[Anonymous]

What kind of car?

Leased through who?

Yearly mileage?

Whats your current mileage?

Payment?

How long is left?

[amp0804]

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@Anonymous wrote:

What kind of car?

Leased through who?

Yearly mileage?

Whats your current mileage?

Payment?

How long is left?

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x2

You have to realize if you got yourself in a perdicament it may be easier to pay the term of the whole lease while trying to save money on the side. Then when your ready to turn your lease in you can purchase a used car. If you finance after a lease you also have to remember your adding 3-5 years of payment on top of the 2-3 you already paid into the car. So sometimes its not really worth it unless its really worth it. ( Did that make sense?, haha)

[Anonymous]

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@amp0804 wrote:

x2

You have to realize if you got yourself in a perdicament it may be easier to pay the term of the whole lease while trying to save money on the side. Then when your ready to turn your lease in you can purchase a used car. If you finance after a lease you also have to remember your adding 3-5 years of payment on top of the 2-3 you already paid into the car. So sometimes its not really worth it unless its really worth it. ( Did that make sense?, haha)

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Depending on who they leased through and how long they may have left, if it was a lease through manufacturing arm, they may be offering early term out to a new vehicle lease/purchase- and you could lease or buy a cheaper vehicle with a cheaper payment.