What You Must Know About Lease Early Termination

If you do not keep your leased vehicle for the entire term agreed upon then you have early terminated. Some lessors will not let you early terminate under any conditions. There is usually a minimum requirement of keeping the lease for 12 months before you can early terminate. This distinguishes a lease from a short term rental. You will pay an early termination penalty. This clause is one of the most misunderstood in the lease agreement. You must fully and completely understand the dollars that you will pay for early termination.
What constitutes early termination?

• Totaling your leased vehicle in an accident and purchasing another car. Yes, that is early termination.
• As the lessee, you die before the end of lease term. Yes, this is also early termination.
• You want to trade early before end of lease for a new model.
• You want to transfer your lease and have another assume payments. (Lease assumptions in most states are illegal.)
• Other - Ask dealer to review all instances for early termination based on that dealers lease.

NOTE: Early termination can cost you a considerable amount of money. If your lessor cannot explain the terms and conditions in a language that you understand with examples in dollars and cents then look for another lessor.

On behalf of the Lessor: The lessor has amortized the lease depreciation for the entire agreed upon term of the lease. Early termination may cause the Lessor to incur a loss. If so, you may be charged a penalty to offset this loss.