The five ways out of a car lease
| Option | How it works | Usually worth a look when |
|---|---|---|
| Return it early | Hand the car back to the leasing company before the end date and pay the early termination charge. | Only a few payments are left, or nothing else is allowed. |
| Buy it out | Pay the payoff amount, take ownership, then keep the car or sell it yourself. | The car is worth about what you owe, or more. |
| Sell or trade it to a dealer | A dealer or buyer pays off the lease, and you keep or pay the difference. | The car is worth more than the dealer payoff, and your leasing company accepts dealer payoffs. |
| Transfer the lease | Someone else takes over your remaining payments, with the leasing company's approval. | Your leasing company allows transfers and your payment is attractive to others. |
| Wait it out | Keep paying and return the car at the scheduled end. | Every early option costs more than the payments left. |
Why remaining payments aren't the real cost
It's natural to think ending a lease early costs "the payments I have left." It usually doesn't work that way. When you lease, you pay for the car's expected loss in value over the lease, plus finance charges. Ending early means settling what's left of that balance, and the car's residual value (its projected value at lease end) is part of it.
So the number that matters is your payoff amount: what the leasing company would accept to close the lease on a given day. Compare it with what the car would sell for today:
- Car worth more than the payoff: you may have equity, and selling, trading, or buying out the car could cost little or even leave money over.
- Car worth less than the payoff: you have negative equity, and every option involves covering that gap one way or another. Waiting, or transferring the lease, may then be the cheaper path.
Our guide to lease payoff vs. residual value explains the difference in detail.
How to work out your cheapest way out
- Find your lease contract. Look for the sections on early termination and the purchase option. Federal rules require leases to explain how an early termination charge is figured and whether, when, and for how much you can buy the car.
- Ask your leasing company for a written payoff quote. Ask for the amount for you and for a dealer (they can differ), and the "good through" date.
- Get real offers for the car. Two or three written offers from dealers or online buyers tell you what it's worth today far better than a guess.
- Ask about the rules. Can a dealer or another buyer pay off the lease? Can the lease be transferred, and for what fee? Does buying out the car add sales tax in your state?
- Compare every option by net cost. Include fees, taxes, extra-mile and wear charges, and the payments you'd still make while you wait.
What can change the answer
- Dealer payoff restrictions. Some leasing companies only accept payoffs from you or from their own brand's dealers, or quote dealers a higher amount.
- Sales tax on a buyout. Many states tax a lease buyout, which can add hundreds or thousands of dollars.
- Extra miles and wear. If you're over your mileage allowance, returning the car adds per-mile charges; selling or transferring may avoid them.
- Fees. Early termination fees, disposition fees, and transfer fees are set by your contract and your leasing company.
The free calculator below shows how many payments are left and whether you're heading for mileage charges. To compare your actual options by estimated net cost, the Lease Exit Report uses your payoff amount, the car's value, and your contract.