auto

Should you turn in a leased car early?

Tara Baukus MelloQuestionDear Driving for Dollars,
I had my own business and I leased a car almost two years ago for a hefty $635 per month. My business has declined drastically and I'm now in a financial mess. I'm considering letting the car go in order to use the money to pay off credit card debt. Is this even an option? What should I do?
-- John

AnswerDear John,
While you can most likely turn in your leased car early, it's unlikely that you'll escape paying some pretty high penalties. And that's in addition to any extra fees that you'd be charged at turn-in time for wear and tear or additional mileage. Check your car-lease contract or call the leasing company to find out exactly what you'll owe. Next, do the math to see if turning in your leased car in early will help you financially.

You may want to consider a lease transfer, a process where someone else takes over your car lease. Assuming your car-lease contract allows it, this can be the best option to get you out of your contract while avoiding the penalties of turning in your leased car early.

If you do choose to do a lease transfer, consider working with a reputable company such as LeaseTrader.com or Swapalease.com, which acts as a middleman to find a new lessee and to complete the transfer. If you locate someone willing to take over the lease on your own, hire an attorney to draw up a contract to ensure that the person takes full responsibility for the car and fees associated with the remainder of the lease.

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If you have a car question, e-mail it to us at Driving for Dollars. Read more Driving for Dollars columns and Bankrate auto stories.
 

Bankrate's content, including the guidance of its advice-and-expert columns and this Web site, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this Web site is governed by Bankrate's Terms of Use.

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