Easy to Follow Guide to Your End of Lease Options

Lease Advice

Photo Credit: argus/Shutterstock
On the Car Pro Show, we always get a lot of calls about what to do at the end of a car lease. To help you figure out whatís best for you, I recently put together some easy to understand tips on what to do at the end of a lease.

Start Your Research About 90 Days Before Your Lease Is Up

As you approach the end of a lease, at about 90 days from the end, that is the time to get your lease contract out and look it over. Odds are you havenít looked at it in a long time. Look for the residual value, sometimes called the lease-end value. This is one of two very important numbers you need. The residual value is the amount you can purchase the vehicle for at the end of a lease, and that number is set in stone. Although you may have no intentions of buying your leased vehicle, you still need to know this number to determine if you have equity.

You Only Have Three Options at Lease End

Equity? Every time I mention you could have equity in a leased vehicle, people are amazed and confused. Those who got into the habit of turning in their old keys and getting a new lease often never check for equity. At the end of a lease, you have three options:

Walk away from the lease: Youíll owe a disposition fee, mileage charges if applicable, and any wear and tear charges.

Trade the vehicle in: You can trade it in anywhere for any make and model you wish, you are not tied to the dealer you leased from. By trading, you avoid the disposition fee, mileage charges, and wear and tear.

Purchase the vehicle: You have the first right of refusal to purchase your leased vehicle for the residual value. If you do not purchase it, the dealership has the next opportunity, and if it does not purchase it, the lease company gets it back and sends it to auction. Like trading your vehicle in, if you purchase your leased car, there are no fees or charging, unless you are in Texas, which charges sales tax on the purchase of your leased car.

Find Out The True Value Of Your Leased Car

The second important number you need is a true value. Unfortunately, finding a true value is not easy to do, and it is impossible to do online. None of the trade-in values online are accurate, especially on vehicles that are only 2-3 years old. The values online are often too high, but I see many cases where the values are extremely low. Either case can skew your decision-making process at the end of a lease. If youíve listened to my radio show for any amount of time, youíve heard me say ďa car is only worth what someone is willing to write a check forĒ. The P.S. to that is Kelly Blue Book, Edmunds, and the others donít write checks.

So how do you actually find out what your leased car is worth? You get an offer from a dealer. It can be a new car dealership, every one of them buys cars, but the trick is talking to the used car manager. If you talk to a salesperson, youíll end up getting a trade allowance, which can be manipulated. When you speak to the used car manager, just ask him should you decide to sell it, what would he pay for it?

In most markets, there are large used car dealers who advertise they want to buy cars and have an easy process for making you an offer. CarMax is the largest in the country, but there are many others who pay top dollar.

I Have The Two Important Numbers Ė Now What?

Now that we have the two important numbers (the residual value and the true value) it is decision time to figure out which of the three options above is the smartest. Letís use three examples:

You found a dealer ready to write a check for $20,000 for your leased car. The residual value is $18,000. You have $2000 in true equity that belongs to you. You can trade the car in and use the $2000 to reduce the next payment, whether you buy or lease, or you can take your leased car to the dealership that was high bidder, it will pay it off and write you a check for $2000 that you can do with as you wish. Remember, in both these scenarios, you owe nothing further to the lease company.

The opposite numbers apply. The residual value is $20,000 and the best offer youíve gotten is $18,000. This is when we walk away. Factor in the disposition fees, wear and tear, and any mileage charges.

The real value and the residual value are the same, both $18,000, for instance. Then youíll want to trade the car or sell it to a dealer to avoid the end of lease charges.

If you love your leased car and just donít want to part with it, thatís OK, but you still want to go through finding the true value. There is no reason to way overpay for your own car. I think it is reasonable to pay a little more for your own car since you know the history of it.

In Conclusion

Iíve told the story on the air several times, but a personal friend of mine who is on a cycle of leasing was about to walk away from a low mileage Cadillac Escalade. She was just going to turn the Cadillac in where she leased it, and then lease an Infiniti. I made her go through the process above, and she had $9000 in equity she pocketed.

Will everyone have equity? No, there are many factors including what is going on in your market. For instance, cars coming off lease in South Texas right now are bringing huge money due to the hurricane (assuming your lease car was not flooded). There will be a ton of leases ending there soon with equity. Discontinued cars will not often provide equity, and convertibles in the dead of winter probably will not have equity. Every case is different.

No matter what kind of vehicle you have, or where you are located, you should want to know where you stand before ending your lease.
Hi Jerry,

On 8/27/19 I traded in our 36 mth. lease of a 2017 Subaru WRX with low miles (17,500) for a 2019 Mustang. Residual was $20,205 on the WRX -Dealer payoff was $20,392.15 and Ford dealer offered $21,700 with the difference applied to the Mustang lease (about $1,300 equity) and put the WRX on their lot. Now Subaru Financial claims $300. disposition fee + $18.00 in taxes. Am I liable for this fee when and if not how do I resolve this???

Thanks, Robert
The Car P.
In my opinion, there should not be a disposition fee charged here since it was traded in. I would contact Subaru Financial and explain everything. Every lease company is different, but I've never seen disposition charged unless you exercise the walk away option.

Jerry Reynolds,
Hi Jerry,

I've read your article on my lease end options. Thank you for the information! I know what my residual value is on my lease ending in two months (Nov 2019) -- it's ~$20K.

I'm beginning to ask various Used Car Sales Managers what they would pay for my car if I were to sell it to determine if I have any equity. My question is, what if the highest bidder price is $18K (less than my residual value), but there is a car on the lot that I am interested in that is $16k? I know I wouldn't have any equity at an $18K sale price over the residual value ($20K), but can it still be traded in for a less expensive car on their lot? Is there benefit to this? Or is my best course to walk away from the lease and start a new sales process on the desired $16K car?

Thank you!
The Car P.
James, just walk away from the current lease assuming you are OK on mileage and no wear and tear charges. Then decide what you want to do about your next purchase or lease. No need to roll $2000 or so into the next vehicle when you can simply walk away.

Best of luck!

Jerry Reynolds
Hi Jerry!
I an in my first ever lease, having always bought new. It is a 3yr lease of an AcuraMDX. The lease ends in July 2020.
I do not like the car and would like to end the lease early. I have another car, so I don't need to buy, lease or acquire another one!
So, what is the downside or penalty for walking away early from a lease?
Thank you,
The Car P.
Vince, there really isn't a cheap option for you here. If you want to walk away now, you'd have to make up all the remaining payments to do so. OR you can sell it yourself to a dealer or an individual, but if the sale price is less than the amount you owe, that money will have to be made up also.

I'd start by getting a cash offer from a dealer like CarMax, then call and get the current payoff. That will tell you where you stand.

Let me know how I can help you.

Jerry Reynolds
Hi Jerry

I have a Subaru Forester 2017 and the lease ends in February 2020. I'm starting to get mail from other dealers offering me check, discounts, etc if I get a new lease with them. I am interested to lease a new car but not with my previous dealership. I don't want a Subaru.
What should I do? Could I just trade my Subary for and Honda, for example? do I need to pay disposition fee, mileage charges, and wear and tear? What's the process I should follow?
This is my first time getting a lease.

The Car P.
Read this from my FAQ page:


You can trade it for whatever brand car you want unless you owe more than it's value, then that will have to be dealt with. If you trade it, there is no disposition, wear and tear, or mileage fees.

Jerry Reynolds,
Hi Jerry,

My current 36-month BMW lease will mature on 10/15/19, and I am going to do a walk away turn in.
My question is (as long as I will complete paying all 36 lease payments), do I have to turn in the car on exactly 10/15? Can I do that like 10 or 20 days before that?

Thank you!
The Car P.
Yes, as long as the final payment has been made, you can walk away any time. Be sure to read my END OF LEASE OPTIONS on my FAQ page before you just walk away.

Jerry Reynolds
Elizabeth R.
Hi! I have a 2017 Hyundai Elantra and the lease ends in mid-September. I'd like to move to the Toyota family but am ~12k miles over my allotment on my current lease. Does it make more sense to trade in the Elantra for a new Hyundai, knowing my mileage has now significantly decreased (used to put on 15k miles/year, now am at about 9k/year) or to pay off the disposition fees and mileage and make the move out of Hyundai? I've had very poor experiences with Hyundai's customer service where when bringing the car in the car to add a part to the engine, it came back damaged with the front bumper hanging off, a brand new battery no longer working, and a hole in the tire. Very iffy on sticking with this company and leasing a new car with them, I'd love to get back into a Toyota for their great quality and customer service, but also want to manage expenses in the transition process.
The Car P.
Elizabeth, it is certainly worth looking at two numbers:

1). what is my car truly worth versus the current payoff, I explain how to do this in the leasing section at my FAQ page: http://www.carprousa.com/faq

2). Talk to the lease company about pre-termination inspection to let you know how much cash it will take to walk away from the lease, total.

Once you've done your homework, the best way to go will be very evident.

Jerry Reynolds,
Annie L
Thank you for this great information. I am coming up on the end of my lease in December 2019 on my 2016 car, I have kept the mileage far below the limit and my car is in great condition. I assume I have some equity in the car and would love to be able to keep it. What would be my best course of action to keep the car, take equity out and reduce my monthly payment?
Amy P.
Annie, just follow the directions at that article. Not sure where you are but getting a cash offer from a few dealerships isn't hard.

If your car is worth more than the residual value, just visit one of my dealers, you'll be in good hands.

Jerry Reynolds
Great article, thank you. I have a 2106 fully loaded Toyota Highlander (Limited Platinum). Not a scratch or blemish in or out. My 3 year, 45,000 mile lease is coming to an end in November, and I will probably only have 18,000 miles on it at that point. Residual value is $24,000. They currently have the same exact car on their lot (same year, same options) with 77,000 miles on it for $30k and change. Right now my trade-in value is roughly just over $32k. Long story short, I am most likely going to have quite a bit of equity in the vehicle at the end of the lease, barring any accidents, etc.. If I chose to buy it, can I use the equity as a down payment towards a loan for it? I have read that you can use the equity as a down payment for a new car, but haven't seen where I can use it as a down payment for the SAME vehicle, with a used car loan.

Thank you in advance,
Amy P.
Julie, you cannot use the equity as a down payment, but buying your vehicle well under the value is the same thing.

In other words, if your math is correct, you'll be paying $24,000 for a $32,000 vehicle and that's awesome!

Jerry Reynolds
Jack S.
A local financial institution, credit unions are a good choice for this, often lend 100% value (at their determination) on recent model used vehicles. Say, for instance, they value your vehicle at $30K, you have the option of either having the credit union establish a new loan at the $24K pay-off amount and you retain the excess equity in the vehicle that you keep, or take the 100% finance offer and pocket the excess equity cash for yourself. It's a good position to be in at the end of a lease !
The Car P.
You are correct Jack. Not everyone comes out that well, sometimes the residuals are too high or the market has shifted like we are seeing with sedans.

The one thing I love about leasing is you can't be upside down if you stay in the mileage and keep the car nice. Having equity is just a plus!

Jerry Reynolds,
My wife has ten-months left on her three-year Camry lease, but she really wants a Gladiator, especially after seeing the incredibly low lease payments on Jeep.com. Would we be foolish to try to make the move? Are we likely to be upside down?
Amy P.
Alan, you can certainly look at numbers on one, but the payment you are seeing is on a stripped down Gladiator with an over $5000 down payment. The base models start around $35,000 but they run all the way to $60,000.

Jerry Reynolds
I've never had a lease before this is my first time please advice; I have a Honda Accord 2016 my lease is up on August 2019 in a few months i didn't go over my mileage, Nothing is wrong with the car besides may some small scratches like when people open the door next to you but nothing mayor. But my credit did go low do to some personal issue for the pass months i've been working on getting back up again which i have, is this going to be a problem? if i want a new lease or if a want to buy the car? how much extra would they ask me? not sure how this end Lease thing works at the end... Thank You in advance
Amy P.
Every case is different. You can start to work with one of our dealers now to see the best course of action. If the current Honda is worth more than the amount owed, you can do something now. All of our dealers are here: https://www.carprousa.com/certified-dealer-search.php


Jerry Reynolds, President
Car Pro Radio Network
Frank J.
Hi Jerry-
My wife and I leased a car from one of your dealers here in Texas. We are midterm in the lease and will be moving to Florida in May. My question is can we turn the car in at the end of the lease in Florida or do we have to turn it in in Texas? Would it be smarter to turn the car in early or trade it in? What would you suggest? Thank you and I enjoy your radio show.
Amy P.
You can turn it in in Florida, that is not a problem. This happens frequently. It's unlikely you'd be able to sell it for more than the payoff, so I'd plan on turning it in after you get moved.

Good luck.

Jerry Reynolds, President
Car Pro Radio Network
Bank in June 2016 I leased a 2016 Dodge RAM 1500. My lease is up in June 2019, however, I am currently 16,500 miles over the allowable miles. My life has changed a bit and i didn't foresee the extra mileage. The residual value of the car was set at around $28,000 (22,500 max allowable miles) however, the true value of the truck is around $22,000 at best. I really would love to get out of this lease, however, I am just worried about all the extra fees that I will incur by doing so. The vehicle was bought from a Dodge delaer, however, the financing company is a third-party. What do you suggest that i do? I will need another car to replace this one. Thank you.
Amy P.
If you like the Ram, just purchase at the end of the lease and you won't be subject to the mileage or wear and tear fees. Otherwise, you'll need to come up with a bunch of cash to walk away. I think that is your cheapest way out.

Jerry Reynolds
Just to clarify, the residual value on the lease contract is NOT necessarily set in stone. If you speak with someone at the dealership, they'll tell you that it is. If you contact the leasing company, they would rather sell it to you for more than they'd get at auction; which may be less than the residual value. It's worth the call. Good luck to all.
Amy P.
I won't say you are wrong, but in 35 years in the business, I've never seen it. With the old open ended leases, that was true, but none of the OEM finance companies even offer those.

Thanks for listening.

We are seniors at the end of a 3 yr. lease on a 2016 Kia Forte with 19K mi on the allowable 30K. It is in great shape with no issues and we are trying to determine if we have an equity position.
What reassurance do we have that a used care mgr. will provide the actual "true value"a
Thank you
Amy P.
Good to hear from you. You should get several opinions of the CASH VALUE amount to determine a good median range. If you have a Carmax in your town, they do a good job with their free cash offers.

If you haven't read my leasing section at my FAQ page, you should do so. I think it will help you.

I have a fully loaded RX 350 with a 36 mo lease up the end of May. I only have 22,000 miles and the buy out is $34,643. I was planning on purchasing the car as I am retiring but was in an accident about 2 years ago which resulted in about $15,000 worth of body damage. There was no frame damage or anything else.

I know the dealer will not keep the car and they said at the lease inception that the buy price out is non-negotiable. I live in the Los Angeles area and the bodywork was done by one of the best body shops and they have given me a lifetime warranty. Is there any way to negotiate with the dealer? I am sure they will send it to auction. Is there anyway to offer x% over what they would get there? Any suggestions?

Thanks! Vicki
Amy P.

Vicki, the dealer has nothing to do with the buy out price, that is set by Lexus Financial, and it's set in stone. I would not recommend buying this vehicle due to the accident, that's the beauty part of a lease. Although the repairs seem fine now, often they don't show up for years.

Talk to my friend Matt the GM at Lexus Santa Monica. You can buy a Certified RX from him that has not been damaged, or lease a new one, he's a great guy: https://www.carprousa.com/dealers/losangeles/Lexus

Jerry Reynolds
How go you find the residual value of your leased car?
Thanks, Glenda Salter
Amy P.
Hi Glenda!

You should be able to find that here in Jerry's list of leasing terms to know. Let us know if you need more information.
Thanks for writing!

My 36 month lease with Subaru allows me to continue making lease payments for at least six months at the end of my 36. Is that a good idea or is it better to just go ahead and lease another car? What about turning the car in a few months early, if there is good equity?
Amy P.
If there is good equity now, Iíd do it now. Things can change quickly, so Iíd pull the trigger if indeed the equity is there.

I hope this helps.

Jerry Reynolds