How a Car Lease Swap Works

When you lease a car, generally the plan is to drive it for the duration of the lease, then either purchase it or trade it in for another vehicle. If you don't wait out the entire lease period, you face penalties. However, there is an option for those who want to end a lease early. If someone else takes over your lease, you may be able to find a less expensive way out. But it's important to check your contract for any restrictions, as well as any fees that will apply.

How a Car Lease Swap Works
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What Is a Car Lease Swap?

With a car lease swap, you simply transfer the remainder of your car lease to a willing buyer. The buyer takes over your payments and turns the car back in at the end of the term. The buyer has the same options you would have at the end of the lease ­– buy the car from the leasing company, turn it back in, trade it for another vehicle or start a new lease.

How Does a Car Lease Swap Work?

Deciding to swap your lease is only the first step. You'll need to find someone willing to take over your lease. Don't assume this is just a great deal for you. It can be difficult to find the exact make and model in slightly used condition, so some consumers specifically look for active leases. Plus, they get to lease a vehicle without having to hand over a down payment first. Check with friends and family to see if anyone would be interested in taking over your lease.

After you've gone through your leasing contract and determined that lease swaps are, indeed, allowed and you've found a willing buyer, get in touch with the leasing company. The company will, of course, want the buyer to go through the same credit approval process you did, since the buyer will be taking over your payments. Once approved, you'll both complete and sign paperwork that will officially transfer the car to the buyer.

How Much Does It Cost to Swap a Lease?

When it comes to lease swaps, it's all about what you agreed to in your contract. Some leasing companies freely allow lease swaps, while others restrict them altogether. Still others impose fees on the exchange. The fee is called a "transfer fee," and it will likely be in the $300 range.

The exact cost to swap a lease differs from one leasing company to another. BMW, one of the companies that offers lease swaps, charges a $100 application fee, plus a $400 transfer fee. These costs are generally paid by the buyer, although if you're trying to talk someone into it, it might be worthwhile to offer to pay it. BMW won't allow you to transfer in the last six months of your lease. Toyota charges only a $200 transfer fee, also with no transfer allowed in the last six months. On the flip side, Hyundai and Kia do not allow lease transfers.

Can You Get Out of a Car Lease Early?

Although it isn't free to transfer your lease to someone else, the fees are much cheaper than terminating your lease outright. Most companies will require you to pay the remainder of payments on the lease, as well as an early termination fee. If you're having difficulty making the payments, contact the company and ask if you can negotiate a reduction.

Can You Trade in a Lease for Another Car?

Driving a leased car is not the same as having a car that you purchased. You have no equity in the car, so you have nothing of value to offer. During the time you've driven the car, it has actually depreciated in value, so you're likely "upside down," which means that you owe more than the car is worth. If you can hold out until the end of your lease, you can work with the leasing company to get a new lease or purchase a car. If you have equity in the vehicle, you'll have a credit toward your purchase. But chances are you'll owe money and the dealer will either wrap that cost into your new payments or you'll pay cash along with your down payment on the new car.