Reedman Toll Auto World

Answers About Leasing

Some may hesitate leasing a vehicle because of the many unknowns.  There are many questions that people have regarding a leased car.  Here are some of the most important ones:

How do I get out of my lease before the contract has expired?

People never know when their financial picture might change unexpectedly, meaning they can no longer afford lease payments.  Another reason someone would want to get out of a lease is a change in their lifestyle, for example someone may be under contract to lease a little tiny sports car, but before the lease is up they have a baby and need a different type of vehicle.  At the same time, no one wants to lose out on a lot of money from breaking a lease.  But there are options.

Find someone to assume the lease. Call the leasing company and ask if they allow "assumptions."  Expect to pay a fee to do the assumption — about $300.  Make sure the person taking over the lease is reputable and has good credit, and also make sure you provide the car in good condition so the new lessee isn't taking over hidden problems.

Sell the car yourself. Call the bank and ask for the current buyout amount.  Look online for the market value of the car.  If the current market value is close to the buyout number, try to sell the car yourself and pay off the bank. Even if you have to take a $1,000 or $2,000 loss, you are better off than continuing the payments or walking away from the car.  Remember, in addition to your lease payment, there are insurance payments, too.

Walk away from the lease. This is the option where you will lose out the most.  Avoid it if possible, because if you give the car back to the lessor, and walk away, it will go on your credit report as a "repo."

How do I buy my car at the end of the lease?

Many people are at a loss at the end of a lease.  They really like the vehicle they have been driving, and now they do not have one at all.  Buying the car would be ideal, but what if your contract lists the "residual value" at more than you want to pay.  In most cases buyout is negotiable.  It is actually in the best interest of the leasing company to sell the car to you. Their only other option may be selling at an auction, and almost certainly end up losing money, between auction fees and a low selling price.  Customers need to make sure they don't buy the vehicle for the 'average retail' price.  They should offer the bank a figure that is closer to wholesale.

If you are leasing from the manufacturer, call the appropriate dealership.  A lot of dealerships have an employee designated for accepting lease returns and you can talk to them about buying the car.  Still, it will be the manufacturer’s decision whether to accept your price.

An independent leasing company may bring more success.  Tell the bank you are interested in buying the car and possibly financing it through them. Make an offer, and it may be accepted.

How do you avoid extra expenses at the end of the lease?

At the end of a lease, it can be an anxious moment when the dealer inspects the vehicle’s condition for extra charges. Usually, the charges are assessed because of excess wear and tear or additional miles on the odometer above the agreed-upon figure in the contract.  As the leasing market tightens up, banks are looking for a way to make money from returned cars.  To avoid this critical eye you must keep the car at a condition above and beyond "average wear and tear" to avoid penalties.

There are basic steps to make sure the vehicle is in top shape on return day.  Have the vehicle washed and detailed. Service the vehicle on a regular basis and right before you turn it in. Keep any maintenance records, stay within mileage limit, and any dents or chips in the window or body should be fixed ahead of time, they may even be covered by insurance.  Lastly, if your mileage is above the agreed amount, consider selling it yourself rather than facing the penalty.  If paying the fees is the only option, accept it – after all you got extra mileage out of a vehicle for this extra money.

Many problems with leasing can be avoided by starting off on the right foot.  This means putting as little money down as possible.  If the vehicle is totaled you may not get your down payment back.  Don't go into a lease longer than you would normally keep a car. As a lease gets longer, it is more difficult to get out of, and usually results in extra turn in fees.  If you are at all considering buying the vehicle at the end of the lease, get one that holds its value, as some do much better than others.