Little-known Ways to get out of a Car Lease early

Car lease

It can be fun to drive around in an expensive car that you don’t even own. No more worrying about maintenance, low monthly payments, tax benefits, no need to pay a huge sum upfront and no repair costs. Everything seems to have worked out perfectly.

But there is a catch in leasing a car. What if for some reason you lose interest in that car? Maybe you bought a new one or are going to relocate to another location. Anything can happen and in such a situation you need to find the cheapest way to get out of the car lease.

Here are a few ways you can get out of a car lease early.

1. Transfer your lease

Instead of worrying about the lease cancellation process, you can just find another person who wants the same car and willing to pay off the remaining lease. Find a third party buyer from a site like swapalease.com and get rid of the car forever.

SwapLease is also featured in popular publications like The New York Times and The Wall Street Journal. So, you can trust them to get the job done.

The process of transfer is not at all complicated. You just have to submit the required documents(of the third party buyer) along with a small transfer fee($50-$500). Your original leaser will verify the document and approve the deal.

2. Just return the car

This option is easy but is the least preferred way to get rid of a car on lease. When you return a car that you had on a lease, you are required to pay a hefty termination fee to your leasing company.

Along with the termination fee, you will also have to pay the remaining amount that you owe. Then, the leasing company will either sell or lease the car at an auto auction. This might you only respite as the sooner they sell/lease it, the lesser will be your depreciation amount.

3. Trade or sell the car to a third party

Selling or trading the car you have on lease is another popular and profitable option. You can’t directly go out to sell the car as you don’t yet own it. To find eligible buyers for the car, you need to first buy it from the leasing company(also pay the termination fee).

This method is profitable as you get to decide the price for the vehicle and also get to keep the profits. Secondly, trading the car to another dealer is also a good option. But you won’t get the same amount of profits. The only respite here is you get to avoid paying the taxes as you are not directly involved in the transaction.

Summary

By now you must have understood that there are some pros and cons of getting out of a car lease early. Since you made a deal with the leasing company, getting out it will not be possible without paying the penalty. However, the second option is the best one. Particularly, if the car in a good condition and the model sought-after by many people.

The Importance of Debt Management

debt management

Even a little debt can snowball. Interest rates can mean that even regular repayments are only just enough to keep you afloat, and poor debt management can quickly see things get out of control.

No matter how much you owe, debt management is crucial to avoid small amounts of money owed turning into ever-increasing money problems. When it comes to understanding your debt, financial literacy is paramount, and misplaced confidence in their debt juggling skills can often lead spenders into greater financial difficulty. 

The post in the link above does a great job of explaining the four pillars of financial literacy – debt, saving, budgeting and investing – and how best to manage your money so you can see the big picture.

It’s a good idea to make a list of your debts, your monthly payments and your due date so you can refer to this list as you pay your bills. Your credit report can help you confirm the debts you have to pay, and make sure you update your list periodically as the amount you owe changes.

Paying your bills on time is an important part of debt management to avoid even more debt piling on due to late payment fees. A calendar reminder can help you stay on top of what payments are due so you never miss one – otherwise you could see your interest rates increase.

Decide what debts to focus on

It’s a good idea to pay your credit card debts first, as credit cards often have the highest rate of interest when it comes to debt. If you have more than one credit card to pay, choose to pay the one with the highest interest rate first, as this is the one that will cost you the most money.

Even if you can’t afford to pay off much of your debt, you should always make the minimum payment. Even though it won’t make a big difference due to interest rates, it will keep your debt from growing and ensure that your credit rating remains intact. Missing the minimum payment can make it very hard to catch up.

Once your biggest payment has been prioritised, go through your debt list and decide in which order they ought to be paid. If you have enough money, you could choose to pay off the debt with the lowest balance first, simply to get it out of the way and cross it off your list. 

Managing debt with limited funds

Don’t pay more than you can afford – or debt begets debt. If you find yourself with inadequate funds for repaying debt, focus on keeping your other accounts in the black. It’s a bad idea to sacrifice positive accounts to pay off those that have already hurt your credit, or you will just end up with more negative accounts to deal with. Just pay your outstanding accounts as soon as you can afford to do so.

When you can, you should work towards creating a backup fund to fall back on in times such as these, so you can avoid getting into deeper debt. Even if you don’t have much to spare each month, saving a little here and there adds up, and can really get you out of a bind when you need it. Even a small emergency fund will cover a few crucial expenses, and you’ll be glad to have it.

Use a monthly budget for debt and expenses

It’s important to create a monthly budget plan so you can ensure that you have enough money to cover your monthly expenses so that your debt does not grow.

Instead of budgeting from month to month, plan far in advance so you can see potential problems coming before they hit. If it looks like you won’t have enough money for your bills in the coming months, you can take action now to prevent issues arising later. A budget like this can also help you see where you can put away any extra money into your emergency funds, or use it to pay debt off a little faster.

Get help to manage your debt

You don’t have to suffer with your debt alone. If you are finding it too difficult to pay your debt and other bills every month, a debt relief agency can help you sort through your options. Debt consolidation and bankruptcy are also options to help you manage debt, although each one has pros and cons that can affect your financial future, so it is vital to be well-informed of the consequences before making a decision.

If you are worried about falling back into bad spending habits and accumulating more debt, or if you feel you have a spending problem that is preventing you from managing your debt, there are groups such as Debtors Anonymous that can really help you figure out the root of your problem, helping you to get back on track.