What Are the Penalties of Getting Out of a Car Lease Early?

Written by louise balle
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What Are the Penalties of Getting Out of a Car Lease Early?
There are penalties when you end a car lease early. (yellow car, a honda Japanese sport car model image by alma_sacra from Fotolia.com)

A car lease is an agreement between a car dealership and buyer that usually lasts about three years. But there are cases when the buyer decides to end the lease early---for instance, if the buyer loses his job and cannot afford payments. The repercussions of bailing from your car lease early vary according to the car dealer or financing company, but there are a few penalties that you will likely have to deal with as a result of this decision.


If you end a car lease early, the financing company will charge you an early termination penalty. In some cases, the amount of this penalty could be as expensive as continuing to make the payments for the rest of the lease. You will also still have to pay for wear and tear, repairs to visual damage to the car and any additional mileage per your agreement.

Bad Mark on Credit Report

If you cancel your car lease early and don't pay the penalty fees immediately, it could cause the financing company to report negative information to your credit report regarding the transaction. Until you pay the balance, that negative information will persist on your credit history and reduce your credit score. The financing company may be reluctant to grant you a grace period to pay the penalties.

Can't Get Another Lease

One penalty of ending a lease early is that you may have problems getting another lease in the future---if not from all leasing companies, at least from that same financing company. If the company notices you have a history of terminating car leases early, it may deny you financing even if your credit score is acceptable at the time. Talk to your leasing company to find out the exact policy about future leasing opportunities after you've cancelled an agreement.

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