When you take up a car lease, you get to drive a brand new car with all of the bells and whistles, but you also enter a financial agreement with the dealership that typically lasts around 3 years.
That’s why it is important to make sure that you can afford the monthly payments for the entirety of your lease. If you can’t, you may decide that you want to end your car lease contract early. So, the question is, can you end your car lease early?
Ending A Lease Early
A car lease, also known as a Hire Purchase Lease, can be ended and the car returned early through a Voluntary Termination. This is a legal right that the borrower (you, in this case) has to cancel your finance agreement early.
This exists within a finance agreement to protect you, as the consumer, if a situation arises where you are unable to continue to make payments. However, that does not mean you can just end it and not pay any more money. There will be a final payment to make as well as, typically, a penalty payment as well.
How Much Does It Cost To End A Car Lease Early?
When it comes to ending a car lease early, there will almost always be a penalty payment of sorts. How much this will be depends on how much of the lease you have already repaid. For example, typically, a car loses most of its value after the first year of being on the road. That depreciation of value has been pre-calculated and included in the payments you are making each month.
At the point in time where you want to end your contract, the depreciation of the car’s value needs to be calculated again to determine how much of that you have already covered.
How Does Voluntary Termination Work?
If you are looking to end your car lease through Voluntary Termination, you will need to have already paid 50% of the finance agreement, including the interest and fees. So, at the very least, you’ll already know that around 50% of the depreciation should have been covered already.
If you wanted to end the lease agreement before this, it would technically be a breach of contract, so you would need to contact the dealership who offered the car lease, to begin with. Whether or not they allow you to end the lease before the 50% mark is entirely their decision.
So, again, it is highly important that you ensure you are able to pay the monthly fees for a car lease deal. Of course, a car lease is far cheaper than getting a car on other finance options, so before you take on out, ensure that it works with your budget. That way, you should not find yourself in a situation where you need to carry out a voluntary termination in the first place.
You should always look through the various car lease deals and make sure that you are going to be able to afford it.