Are you stuck in a lease that doesn’t quite work for you? Or maybe you’re tired of driving the same vehicle and would prefer to swap out your current leased ride for something else? The good news is you may have options if you refinance your lease. Here’s how it works and how to move forward if you decide it’s a viable option for you.
What is a Vehicle Lease?
A vehicle lease is an arrangement that permits you to drive a vehicle belonging to the lessor (or leasing company /dealership) for a set period of time. You’ll make monthly payments to rent the car and are obligated to adhere to the mileage limits, keep the vehicle in good condition and meet any other terms and conditions of the lease agreement.
Can You Negotiate a Car Lease After Signing?
If you recently signed on the dotted line for a car lease but want to renegotiate the terms, you may be in luck. But this is only for a short period as lease terms are final. So, that break in payments that you receive if you’re experiencing financial hardship doesn’t mean you’re off the hook for those amounts.
However, you may be able to refinance your lease to get a monthly payment or terms that work better for your financial situation.
Is It Possible to Refinance Your Lease?
Yes, it is possible to refinance your lease. Furthermore, it could make financial sense to do so if:
- You’d prefer to keep the vehicle after the lease contract expires instead of entering into a new lease agreement.
- The resale value of the vehicle exceeds the buyout price.
- You plan to keep the vehicle and would prefer to end the lease agreement early and start making auto loan payments instead.
- You have the income and credit rating to qualify for favorable financing terms on an auto loan.
What Happens When You Refinance Your Lease?
When you refinance your car lease, you take out an auto loan to purchase the vehicle from the lessor. Upon approval, you retain possession of the vehicle and make monthly installment payments for a set period instead of lease payments. Once the auto loan is paid in full, the vehicle is yours to keep.
This process is known as a lease buyout, and there are several reputable lenders who offer to finance if you’d like to refinance your lease. More on this shortly.
What are Your Options after Your Lease Ends?
Transfer the Lease
If permitted by the lessor, you can transfer the lease to another person. However, you may incur a transfer fee.
Buy the Car
You can use an online platform to execute an auto lease purchase with ease. Interest rates on these loan products are typically lower and are readily available through credit unions and banks.
Plus, you can purchase other essential coverages, like an extended auto warranty and guaranteed asset protection (GAP) insurance, and roll the fees into your new auto loan. And you’ll get personalized service through the lending process to ensure your needs are met, and your monthly payments work for your budget.
Return and Lease Again
You also have the option to return the vehicle to the dealership and enter into a new lease agreement with another ride. In some instances, you can avoid the standard termination fee by leasing another vehicle with the same dealership.
Lease Pull-ahead
Are you looking to get out of your current lease early to try out another ride? If the dealer offers a lease pull-ahead option, you could get the luxury of entering into a new lease without having to pay the termination fee or monthly payments remaining on your existing lease.
Dealership Buyout
If there’s equity in the vehicle you’re leasing, some dealers will offer a buyout. It involves receiving a cash offer from a dealership and, if you accept, allowing the dealer to remit payment for your outstanding balance on the lease agreement to the lessor (which could be the dealership you’re leasing from or another dealership). You’ll also get a check for any equity you had in the vehicle if there’s any.
