Can You Break a Car Lease?

Written by ciele edwards
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Can You Break a Car Lease?

A car lease is a legal contract. When you sign that contract you are agreeing to abide by all the terms and conditions set forth in the agreement until your lease period is over. Some car lease agreements provide a clause for breaking the lease and some do not. Options, however, do exist if you feel trapped in your car lease. You can opt to pay off the lease or engage in a lease transfer with another individual.

The Facts

When you lease a car you agree to make payments on the vehicle for a set period of time. When your lease period expires, you must return the car to the dealership. Unlike buying a car, in which you make payments on the full value of the automobile, a lease allows you to make payments on only a portion of the car's value. Because of this, leasing a car requires no down payment and can be a very attractive option for cash-strapped consumers.

Breaking a Lease

Provided your lease agreement contains a clause allowing you to do so, you may opt to terminate your lease at any time. Terminating a lease requires you to immediately return the car to the dealership and pay a fee for the privilege of doing so. This fee can be substantial. Once you return the vehicle, the dealership will assess the mileage and any damage the vehicle has sustained. You will also be responsible for paying for minor repairs and mileage fees if you have exceeded the mileage allotment on the vehicle.

Paying off a Lease

Paying off a lease is a good option if you are reasonably close to the end of your lease term and want to avoid excessive break lease fees. With a lease payoff, you simply return the car to the dealership and pay the remaining payments left on the lease in a lump sum. Although it may seem excessive, lease payments are typically much cheaper than car payments and paying off the lease may be a smarter financial move than paying a break lease fee. Paying off a lease is also a good option if your lease agreement does not allow you the option of terminating your lease at will.

Lease Transfer

A lease transfer agreement allows a consumer to legally transfer the lease--and the liability--to another individual. Lease transfers are very common and most dealerships will have no qualms about facilitating a lease transfer between you and another person. To take over your lease, however, an individual must meet your dealership's credit requirements. You must also pay a lease transfer fee to your dealership to finalise the transaction. Although lease transfers are widely accepted, a few automobile manufacturers will allow a lease transfer but not a liability transfer. This leaves you responsible if the new leaseholder does not pay the payments. Check your lender's rules on the process before initiating a lease transfer.


If your dealership does not allow lease transfers and there is no provision in your agreement for you to break the lease, you may request that the dealership repossess the vehicle. Repossession should always be a last resort. When your leased car is repossessed, your credit score will suffer just as much as if you were financing the car and it were repossessed. The negative mark on your credit report from the repossession will remain for seven years. The dealership also has the legal right to sue you for the balance owed on the lease. If, however, you simply cannot pay, walking away is always an option.

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