It's generally accepted that most
money-sources, especially the automakers, lose money on selling the
off-lease autos at the end of the
lease, so they are interested if it might bepossible to get the
car back a little early, and be able to sell the
car and lose a little less money.
It is also not unusual for a money source to contact the
lessee before the end of the
auto lease and try to entice the lessee into
terminating the auto lease right now and get favorable terms on a
new car and a new
car lease
Why Would They do That?
Suppose the balance due on a 36 month
car lease is $2,000, the
residual car value is $14,000, and the
used
carmarket right then for that
car at that precise age is $13,500.
What Prompts Them to End the Lease?
- A competitor will have a ton of similar cars coming off lease in two months and that will depress the market
- A competitor will launch a new car next month that will compete with this model and further depress its used car value
Ride this Market with a little Homework. Here's how to do it.
During the last six months of a
lease, such as month 30-36, look at used
car values for cars almost identical to your
leased car. If you see that they are almost the same, you can bet that the money source would like to hear from you.
Contact the Money source (look for its identity in your
lease contract; don't contact the dealer) and try a little bargaining. You may be pleasantly surprised and have nothing to loose and maybe something to gain.
The money source concludes that if it can get the
car back right away its losses will be less than if waiting until the end of the
lease. More than a few lessees have been surprised to get a phone call from a money source offering to end a
lease right now without penalty and offering a new
lease or a
new car on attractive
purchase terms.
Early Termination of Auto Lease
Car Lease Termination Tip #2: The Best Way to Terminate a Lease regardless of Market Conditions
On the internet, look for any company that offers "end a car lease" or "swapping a lease". These companies maintain nationwide databases of people who only want a end a car lease and match them up with you and arrange a new lease for the short term, and the only fees are at best minimal.
These companies also advertise under "swapping"
auto leases. How to get out of a lease is as important as getting
tips on leasing a car in the first place.
Here's How it Works.
These companies maintain a changing list of people who want a end a car lease. If you are trying to get out at 30 months someone in the country will want a six month
lease can be paired with you. Because the
lease is being legally terminated the money source has an obligation to its investors to sell the car and liquidate is investment.
If the remaining amount on the
lease contract is, for example, $15,000, and the dealer says the car, now used, is only worth $12,000, then the lessee has to come up with $2,000. The remaining six payments ($760/month) total $3,760 which is more than the $2,000 needed to pay off the
lease early. So this is a good deal for the lessee.
Dealers like the Increased Sales Potential by having more Good Used Cars.
The dealer now has on his lot a fully paid for
car with a value of, it says,$12,000.
The money source determines that the value at the end of six months would decline to $10,500 Therefore a six month
lease can then be arranged to cover this difference of $1,500 over six payments. This in turn is a good deal for the new short term lessee.
Alternately, because the
car is fully paid for, the dealer might just as well attempt to sell it outright as a used
car and forego an offer from a company specializing in swapping
leases.
In all of this, it is important for the original
lessee to keep an eye on the money. A few unscrupulous dealers have been known to pad the "payoff" amount, shown above as $2,000, with an extra fee and lump it all together and not tell the person
terminating a lease they they're are taking a cut based on his miseries.
Make sure that the original
lease contract does not have an
early termination penalty. If so, it was a mistake, or an oversight, to have entered into a lease containing such a clause.
Vehicle Delivery
If the distance from the terminating lessee to the new short term lessee is significant. there will have to be some negotiating between the two parties to take care of delivery expense.
Car Lease Termination Tip #3:Defaulting Outright
This is the one certain way to ruin your credit rating. Before doing so, you may as well consult a bankruptcy attorney because if default is done on the spur of the moment your credit rating is zip.
Car Lease Termination Tip #3: Defaulting Outright
This is the one certain way to ruin your credit rating. Before doing so, you may as well consult a bankruptcy attorney because if default is done on the spur of the moment your credit rating is zip.
By: Ralph M