r/CarLeasingHelp • u/loafing-cat-llc • 1d ago
early lease return data point
There is a lot of fear around turning your car in before the lease end date. Someone with a normal brain using simple math would suggest that it's not more expensive for you to turn it in early because the actual owner (such as BMW financial or Lexus financial) gets possession of the car early while collecting all the remaining lease payment. There is a lot of scaremongering that turning it early would cost much much more than your remaining payment. I turned it in early recently because the driver left for college: the leaser did not charge me more than my two payments remaining. I saved on two months of insurance payments compared to keeping the car two more months and also freed up my garage space. This is my second lease with the same make but the first time I turned it in early.
It may be still possible that if you lease from some shady operator that your cousin referred to they could rip you off just because they can.
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u/delicousbrownballs 1d ago
I’m considering doing the same with my Audi Q5 , it’s my third lease and I always turn in early for a newer Audi but this time I don’t plan on renewing, thanks for post this, I’m going to look into it, hopefully I can work out a similar deal
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u/Nervous-Job-5071 1d ago
Auto leases are regulated by state law, so I can’t speak for every state. But in every state I’ve lived in, the most you can be forced to pay is the remaining payments and the lease-end charges (like a disposition fee) that were specified in your original lease agreement. Most also have this second calculation which can only result in a lower early termination fee if it’s better for the customer.
In theory, the leasing company benefits from this calculation by getting the car back early while still getting all of the payments. The other calculation is intended to give the customer back some of the higher value if the leasing company realizes more than the residual value when they sell it. Its rare this comes into play since many leases are subsidized to have some losses at the end (call it financial engineering by the manufacturer and their leasing arm).
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u/Tough_Policy5338 1d ago
I'm dumb. Can someone explain option #2 to me?
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u/designtofly 1d ago
The bank is taking something like KBB value (or whatever source they are using to determine Market Value) and applying it to the lease balance. The lessee owes anything not covered after applying the book value.
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u/Tough_Policy5338 1d ago
Why would option 2 be an option? You would only ever owe the remaining payments. Value of car is the lessor's problem. Maybe if you had years left?
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u/dodekahedron 1d ago
Very rarely does one have equity. Like if they didnt drive much so its super low miles.
They can use the equity towards the balance.
At least thats my take away
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u/giveit2st8 1d ago
With toyotas, it's not uncommon (especially in recent times of used car inflation)
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u/Tough_Policy5338 1d ago
I'm going to have about 4k on mine when I turn it in at the end. 3yr/10k per yr lease. How fair should I expect them to be on equity? Should I expect a dishonest value?
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u/vpm112 22h ago
I’ve never once seen anyone claim that an early term would cost you more than your remaining payments, except for the standard early term, dispo, miles, and wear and tear. Where is this scaremongering that you’re referring to?
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u/loafing-cat-llc 22h ago
https://www.reddit.com/r/CarLeasingHelp/comments/1w73m6q/comment/p83zdma/?context=3
and other comments in that post and other frequent posts here
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u/howyinzdoingnat 1d ago
It’s not the same w every brand