Good Morning.I will be turning in a leased car in 7 months, and are hoping I can save some $$$ by turning it in early. Can anybody give me some idea as to what penalties I might incur for early termination?It is a 1995 Toyora 4Runner on its second lease.ThanksArsen
A lease is a contract based on your anticipated use of the vehicle (money) over a stated period of time. When you terminate prematurely you'll usually pay a penalty because the leasor borrowed/committed the money for that length of time UNLESS 1. The vehicle is way below miles, in which case the dealer (leasor) may credit you against the penalty, 2. The dealer has a solid prospect to sell the returned vehicle quickly and/or sell/lease you another vehicle, 3. The lease was subsidized very low intetrest in which case the leasor may benefit by termination. With only 7 months to go why the rush?
Your ideal scenario would be for the dealer to purchase the car from the lease company (I'm assuming this is Toyota). This will only happen if it has low miles and is in good shape mechanically and cosmetically, but it relieves you of the end-of-lease BS and you can start brand new. I've been this lucky once. Namely, if you want to get out of your lease early, and you "turn it in" as if it were the end of the lease, you're going to have to pay the remaining seven payments. The dealer will offer to capitalize this on your next purchase/lease (obviously not smart financially), however, check your lease agreement for particulars. Most have early termination provisions spelled out in the contract, but you can be sure they won't be to your advantage.I like leasing, but end-of-lease usually sucks unless you re-lease with the same manufacturer, in which case, they make things a lot less painful. So far, I've had good luck with Honda/Acura.Good luck to you.
Some questions... do you plan to lease another vehicle? Will it be another Toyota? Will you be comfortable buying a new car from that same dealer? The reason for these questions is....well, if you can go into the dealership and just be "looking". Start slowly looking at the model you really want. When the sales person approaches let them know you are interested. They will ask you the standard question..."what is holding you back from buying this car today?"....bingo.You sadly confide in him/her about your seven months remaining...what a bummer....hmmmm....maybe, just maybe they will fall all over themselves helping you to break that contract early so that you can move into the new vehicle that day.....this of course only works if you have not been living in the dealership drooling over the new car and letting them know what your problem is...it would only work if you let them feel like they are truly working the deal..---maybe this strategy will work for you? good luck either way.Jan
My husband has turned in 2 bmws to the dealer, both 1 to 1.5 years into the lease; he did get another car from them both times. I do think that one time they would have just taken the car as they were out of stock on that model. He did call around to a lot of dealers the first time, and found a dealer who needed his model. He got top price both times. The cars were kept in perfect condition. Maybe this won't apply to your situation, but it does show that leases are not set in stone.
Arsen,Call your Toyota dealer and get the "800" number to Toyota leasing and find out what the "buy out" on your car is. Put the 4Runner up for sale with a price at or a little above your "buy out" price. When you have a buyer (you have to sell for the "buy out" price or more) then call your dealer and tell them you want to buy the car or you have a buyer for the car and you would like the title. They will know what to do. In doing it this way you are selling without owning, you have nothing to lose. If you don't get the price you need, don't sell. If you do get the price you want then you are out of the lease early with know extra charge for extra miles, no capitalization of "early out" lease months and you may even put a little extra money in your pocket to put down on your next car. This strategy is most effective in the last 6 months of a lease. The "buy out" is the residual value of the car plus the lease payments for the remaining months. The residual value is usually low, but too many months of lease payments can push the price out of realistic value for someone else to buy. That is why it works best in the last 6 months of a lease. Good LuckDug32
excellent post Dugs.....great strategy. One of those situations where you put yourself in a "win-win" situation. I would do that.Jan
You really need to talk to the bank which you are leasing the car through (Toyota Financial Services). You can use this as a trade in also and have a dealership pay it off, But in most sitiuations you will have to make the final payment yourself if you are just wanting an early termination.
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