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A car lease does not have to be binding. Vehicle lease terms vary by company and typically allow many options for consumers whose circumstances change. Taking advantage of these options, however, may come with consequences.

Provisions Within the Lease Contract to Break a Car Lease

A lease contract will always outline what is and is not an option when it comes to breaking a vehicle lease. Some dealerships do not allow consumers to break a lease at all. Many, however, will permit it for a fee.

Unfortunately, the fee for breaking a lease is sometimes as much as several month’s lease payments–this is if the lease contract even contains a lease break provision. Many do not.

Early Termination or “Lease Buyout”

A lease buyout is a good option for individuals who do not have much time left on their car lease. With a lease buyout, a consumer must pay off the remaining payments left in the lease agreement and return the vehicle back to the dealership. If a consumer pays $250 monthly for his lease and has three months left under the lease contract, it is cheaper for him to pay for an early termination of the lease rather than to pay a $1000 break lease fee.

Upon return, the car will be scrutinized by the dealership for any nicks, scratches, dents, or minor damage to the vehicle’s interior. The consumer can expect to be charged for any damage he has caused to the car while locked into the lease agreement.

Lease Transfer Agreements

With a lease transfer agreement, a leaseholder may transfer his or her lease to another person for the remainder of the time left on the lease contract. For the majority of leaseholders, this is the most preferable option to break a car lease. Websites such as Swapalease exist to help facilitate these transfers. A leaseholder may pay a small fee and list the details of his car lease on the Swapalease website for consumers in his area to browse.

Prior to attempting to break a car lease with a lease transfer agreement, a leaseholder must ascertain that his lease contract allows for a transfer. Most dealerships are more than happy to allow individuals to transfer their leases for a fee, but some do not. Even more frightening is the fact that some dealerships allow for lease transfers but do not allow for liability transfers. In this situation, a new leaseholder could trash the car and the original leaseholder would be held liable for the damages in the even the other individual did not pay. Companies such as Audi, Nissan, and Chrysler do not allow liability transfers when transferring a vehicle lease.

Any individual hoping to take over a car lease from the original leaseholder must meet the dealership’s credit and income qualifications before the transfer will be approved.

Walking Away From a Vehicle Lease Agreement

Rather than taking steps to break a lease legitimately, some individuals merely abandon their car leases. The problem with this is that abandoning a vehicle lease does not discharge any liability. The original leaseholder is financially responsible for the entire amount stipulated in the lease contract–even if the car is repossessed.

Dealerships will often initiate legal action against individuals who chose to abandon their car leases. Legal action can result in a judgment being levied against the leaseholder for the remaining amount of the lease contract. Not only is a judgment just cause for a creditor (in this case the car dealership) to request wage garnishment in some states, it also will appear on a consumer’s credit report for seven years. If the judgment is not paid, it is renewable by the creditor and may continue to mar the consumer’s credit history for much longer than the standard seven year reporting period.

A legal judgment can prevent a former leaseholder from being approved for a future car lease, vehicle purchase, or even unrelated loans such as mortgages and personal loans.