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4 Ways to Break a Car Lease Without Ruining Your Credit

A California couple discover that exiting their contract is neither easy nor cheap

closeup of a woman's hand reaching over car keys as man's hand is signing a contract

E+ / Getty Images

The Problem

En español | In the fall of 2019, Jan Dunham, 66, a dental office manager, and her husband, Duwayne, 68, a filmmaker, splurged on a three-year lease of a fully loaded electric Audi e-tron, an SUV with room for their massive Labrador retriever in the back. Then COVID-19 hit. Jan was laid off for months, Duwayne's work dried up, and their $1,229 monthly payment (more than double the average for U.S. leases) became a burden. Returning the car and ending payments, they feared, would ding their credit score. “Can we get out of our obligation?” they wrote.

The Advice

duwayne and jan dunham stand next to their vehicle

Alyson Aliano

Duwayne and Jan Dunham leased a car prior to the pandemic.

In normal times, exiting a car lease early is really tough. “The contracts are airtight, pro-leaser, and things can be very expensive,” says Jack Gillis, executive director of the nonprofit Consumer Federation of America. To get out, you generally have four options:

  • Pay back the entire amount due on the lease and turn in the car, leaving you with no car and a lot less money
  • Return the car without paying off the lease, defaulting on your commitment and hurting your credit
  • Find someone to assume your lease
  • Sell the car yourself — buying it from the dealer and either profiting from the sale or losing money on the deal.

But these are not normal times. Auto prices soared this spring, giving the Dunhams and me hope that high demand for used cars could lessen the financial sting. Here are the steps I suggested for them — and recommend for anyone else trying to leave a lease.

1. Start with the leasing company. See how much you'll be charged to return your car right now. That figure is usually about the total of your remaining payments, though given current used-car prices, it might be lower. The leasing company, putting the e-tron's buy-back price at around $63,000, said the Dunhams could return the car by paying $19,512 — about $1,300 less than the sum of their 17 remaining payments. They passed.

2. Get a third-party valuation. Websites such as CarGurus.com, Vroom.com and Carvana.com will estimate your leased car's value — useful if you want to sell. Some sites even facilitate offers. The Dunhams got a $53,000 bid through Edmunds.com, meaning they'd have to pay an added $10,000 to meet the leasing company's buy-back price. They declined and tried another dealer, whose offer was even lower. (Resale values for most electric cars drop particularly fast because innovations are coming so quickly, says Edmunds executive director Jessica Caldwell.)


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3. Try a lease-termination or lease-swap company. It turns out that many auto brokers do lease terminations, mostly by taking a person out of one lease and exchanging it for another. One lease terminator quoted the Dunhams a price of $9,000. Again, a nonstarter.

4. Consider a lease transfer. The last option was to find someone to assume the lease through a site such as SwapALease.com or LeaseTrader.com. (Not all lease agreements allow this.) The Dunhams explored this option, paying $375 for a premium listing on SwapALease. They got an inquiry from someone willing to pay $900 a month for the lease, leaving the Dunhams on the hook for $329 a month. This would cost them $5,593: a lot, but the best deal we found.

The Outcome

In May, I told Duwayne I thought they should cut their losses. While Jan was commuting to her job in the e-tron, a 2003 Mercedes-Benz was sitting in their garage. Couldn't she use that? Wouldn't paying $5,600 to unload the e-tron be preferable to $20,800 in lease payments? “That makes sense,” he responded, later letting me know he was negotiating a lease transfer.

Jean Chatzky is an award-winning personal finance journalist and best-selling author of  books including Women with Money: The Judgment-Free Guide to Creating the Joyful, Less Stressed, Purposeful (and Yes, Rich) Life You Deserve. 

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