This year was a record year for lease returns, with an estimated 4 million people bringing back their vehicles to dealerships, according to Edmunds data. The trend is expected to continue in 2020 as leasing has grown in popularity.
Consumers nearing the end of their lease term typically return the car to the dealership they bought it from, and they either start a new lease or walk away from it altogether. But there are some lesser-known strategies that might allow you to get out of your lease slightly sooner, buy out the vehicle, or potentially walk away with money in your pocket.
GET AN EARLY PULL-AHEAD LEASE DEAL
You’ll start to see letters in your mailbox a few months before your lease is set to end, encouraging you to get out of your lease early. These “lease pull-ahead” offers are designed to lure customers back into the leasing cycle ahead of when their current lease expires. If you’re looking to stay loyal to the brand and are eager to have a new car, a pull-ahead offer is worth considering.
Pull-ahead programs come in two types: those from the automaker and those from the dealer that you leased your car from.
Advertisements from the automaker will usually have well-defined benefits. Some will offer to waive your remaining car payments or disposition fees or forgive excessive mileage and damage fees. You might be able to combine the pull-ahead offer with a loyalty bonus cash incentive, if there are any available, for even greater savings.
Lease pull-ahead programs from dealerships are a little harder to decipher. They might include offers with phrases such as “payments as low as” or “little or no money out of pocket.” This kind of vague wording makes it difficult to determine what exactly dealerships are offering other than the prospect of a new car.
You’ll want to make sure that your remaining payments will be taken care of, rather than rolled into the next lease. Ask for a breakdown of the fees and know your current lease’s buyout price before making a decision.
BUY YOUR LEASED CAR
It’s possible to buy the vehicle you’ve been leasing. You may decide to go this route because you want to break out of the cycle of leasing or because you absolutely love your car and don’t want to give it back to the dealer.
To buy, dig up your lease contract and look for the residual amount, which may also be called your buyout amount. You should also be able to get your residual by calling the bank or finance company that holds your lease.
Once you have the residual amount, make sure to compare that to its market value. If your buyout amount is considerably less than the average retail price, buying your car could indeed be a good deal.
EXTEND THE LEASE
Some people panic as the end of their lease approaches because they don’t have a new car lined up. They’re worried about making a bad vehicle choice as the clock is ticking. But most leasing companies are happy to extend an expiring lease, which can give you some breathing room to find the right car.
Some lenders will allow for a simple month-to-month extension. Others may want you to sign up for extensions for predetermined periods, such as three or six months. Most lenders will cap your extension at 12 months. Your payments will stay the same, and your allotted miles per month won’t change. Usually, a single phone call to your lender is all it takes to stretch out your term.
LEVERAGE THE EQUITY
Leasing companies are usually good at predicting residual value. But because of fluctuations in the marketplace, some vehicles might be worth more than the residual value, particularly if you’re well under the mileage limit. Since you have the right to buy the car at the end of the lease term, you can profit from the lease company’s inaccurate lower estimate.
Ask the dealership if it is willing to appraise your vehicle before turning in your lease. If the difference is in your favor, you can use that toward any excess mileage fees or as a down payment on the next lease. An alternative is to get it appraised independently at a dealership such as CarMax. It will handle the paperwork and, if your car has equity, you can walk away with money in your pocket.
If, on the other hand, the car is worth less than the residual amount, you can turn the car in, as originally intended, without incurring an extra expense.
EDMUNDS SAYS: Leasing may not be for everyone, but it does offer more flexibility than people might expect. Make sure you’re aware of all the options available to you and give some thought to what your plans will be before the lease ends.
This story was provided to The Associated Press by the automotive website Edmunds. Ronald Montoya is a senior consumer advice editor at Edmunds. Twitter: @ronald_montoya8.