Can you buy out of a car lease early?
Car leasing is incredibly popular in many countries, however, the South African consumer is still more on board with the hire purchase agreement, where the car is yours at the end of the loan term. There are many benefits to leasing a vehicle, and of course, there are associated drawbacks, but for those of us seriously considering a lease agreement, can we opt out of the contract early, and what are the implications?
In short, you can buy out of a lease early, and have four options in this regard. The first option is if you want to keep your vehicle, in which case you will have to opt for the early buyout clause, making you liable for the outstanding lease payments, potential taxes and any residual/balloon payments. In some instances, the vehicle may be worth more than the buyout price, making it in the buyer's interest to purchase the vehicle.
The second option is to end your current lease early in order to begin a new lease. The company offering you the lease will be able to structure a deal in which the remainder of your old lease payments and new lease payments can be combined, however, this is risky as the additional payments mean that at the end of the new lease, you may have paid more than you had bargained for.
The third option is to transfer the lease, and this is where you find a party that is willing to take over the remainder of the lease agreement, which could be the best-case scenario for all parties concerned. This is the most affordable way to get out of your lease agreement. The fourth option is the simplest, in principle, and it is where you choose to end the lease, pay the outstanding taxes and balance of the contract, return the car and walk away from the situation, which does not make much sense but is a possibility.
