How Do I Turn In My Lease Before It’s Due?

Jul 10, 2014

Leases are great. They allow you drive more car for less money, and they keep you under a factory warranty for the duration of the lease. But what happens if you still have time left on your lease when you find a new car you want and/or a lower monthly payment? Can you still get out of your lease? The answer is absolutely, although in practice it usually works best if you have 6 months or less remaining on your lease. The reason for this is because of what automotive industry insiders call “lease pull-ahead programs.”

Lease pull-ahead programs generally come from the financial branch of the car manufacturer, and often allow you to use the equity in your lease to satisfy remaining payments. In fact, sometimes the manufacturer will even waive some monthly payments as part of the program! Although not always the case, it is still quite common for customers to be able to come out of a lease a couple months early and get into a new lease with lower monthly payments with no money out of pocket.

In short, lease pull-ahead programs can be a great way to get into a newer car faster, and for less money. But why do the manufacturers do this? Why give up a few months of higher payments? There is a two-part answer. First, it is a loyalty program to keep you with the same brand and to reward you for doing so. Second, these programs help the manufacturer control how many cars of a given model are coming off lease and arriving at the auction at any one time. If too many car leases mature in, say, August, then the market will be flooded with inventory, and the prices will fall. But if the manufacturer can pull some of these car leases forward and spread them across May, June, July, and August, then the supply will remain stable and the prices will not drop.

Lease pull-ahead programs help the customers by getting them into newer cars for lower monthly payments, and they help the manufacturers not lose money at the auction, so when these programs work properly, it is a win-win all the way around. As with the initial lease, it will be important to review the terms and conditions of the program carefully to make sure that the terms of the program make sound financial sense. These programs might not always work for everyone, but they work often enough that it is worth looking into as you approach the end of your lease.