Automotive

Early Lease Termination/Return

  • Last Updated:
  • Aug 8th, 2017 12:29 am
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Deal Addict
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Jul 5, 2011
1411 posts
1160 upvotes
Toronto
TBBA29 wrote:
Aug 4th, 2017 11:49 am
Yes that is definitely a good point as well. There will be a bit of balancing and figuring out if the numbers work out in my favor or not. All things mentioned above are good notes to have during this process.

Thanks to everyone again for their input.
I always say that there is no harm in looking. Checking with 3-4 dealers will only take your time... If you go on your day off or sometime you are free then it's all good.

Check it out, you might be surprised. You might also be disappointed and decide it's better to wait.

Either way it doesn't cost you anything.

Bonus: When you have the appraisal done, ask for a copy of the CarProof from the dealer. Most will run the verified CarProof report during the appraisal process. Chances are they will say no, but you might get a dealer that will print it out and give it to you (for free); to be perfectly honest you could probably get this from any dealer that ran it if you make a big enough of a fuss. Having the CarProof on hand will improve your negotiating odds.
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Deal Addict
Jan 8, 2007
2387 posts
880 upvotes
Calgary
What is your current buyout on the CRV. I am going to guess you probably have some equity in it. Like it's been pointed out, you could sell it now and if you can get more than your residual + $386 + tax(es) you're good to go.

Honda charges $386 for lease buyout OR $450 for lease transfers. There is no other fees or penalties to end contract early.
Deal Expert
Aug 2, 2004
31103 posts
5358 upvotes
East Gwillimbury
There is a difference between a lease and a finance. If it is a lease, you can simply pay out the balance of the lease (6 months) and return the car to he dealership.

If it is a finance, you're obligated to buy the car. You're free to sell the car or trade it in to a dealer as long as the remaining balance and term is paid.

A lease has a residual value at the end of the term which you're not obligated to pay. A finance is a commitment to buy the car. There is no residual value at the end of the term. You own the car. If you sell it or trade it in, that's your prerogative and the value is determined by you or the buyer.

It sounds like you're in a lease. You have two choices if you want to get out now.

1. Pay the remaining 6 months and return the car
2. Put the car on lease busters and hope someone wants a short term lease.
Deal Guru
Aug 14, 2007
10201 posts
1500 upvotes
Toronto
Did I miss something completely here? He has it leased and not financed... OP, if the lease is over at the end of February just wait it out, it's not that far away.
[OP]
Sr. Member
Jan 12, 2013
531 posts
469 upvotes
Halifax
Just to clarify for some, as stated in the Thread Title, I am currently in a lease, but as xjesterxx and a couple others mentioned, it doesn't seem to imply anything other than getting immediate tax savings on a "trade-in" at a dealer if I went that route.
aleks wrote:
Aug 4th, 2017 11:41 pm
What is your current buyout on the CRV. I am going to guess you probably have some equity in it. Like it's been pointed out, you could sell it now and if you can get more than your residual + $386 + tax(es) you're good to go.

Honda charges $386 for lease buyout OR $450 for lease transfers. There is no other fees or penalties to end contract early.
I am waiting to contact HFS to get the exact buy out amount (they are only open Mon-Fri), but I did pull my credit report and it shows a balance of ~$21,000. Canadian black book value ranges from $19,049-22,319 and AutoTrader.ca estimates $19,398-$23,708. So I'm thinking that the likelihood of making any equity off a trade is low, but perhaps I could end up with an even clean break. Would not consider the early trade-in if I had to take neg. equity into a new vehicle. Just not worth it.
Newbie
Jul 30, 2017
91 posts
60 upvotes
Gee wrote:
Aug 5th, 2017 7:49 am
There is a difference between a lease and a finance. If it is a lease, you can simply pay out the balance of the lease (6 months) and return the car to he dealership.
Why the hell would he pay the final 6 months and hand it back? If he is paying it, he might as well keep it! I'd sooner let the vehicle sit in my driveway for those 6 months than to hand it back early all paid for.

And how do you figure paying out a lease is different than paying out a finance? You can buyout a lease at any time and OWN it. Right now the buyout on my lease with honda is listed as $14400 - that's to own. Paying off a balance on a lease is no different than paying off a balance on a traditional loan.
Newbie
Jul 30, 2017
91 posts
60 upvotes
TBBA29 wrote:
Aug 6th, 2017 6:52 am
I am waiting to contact HFS to get the exact buy out amount
Just go to myhonda.ca and create an account. You will see the exact pay out there.
[OP]
Sr. Member
Jan 12, 2013
531 posts
469 upvotes
Halifax
FKEezy wrote:
Aug 6th, 2017 9:13 am
Just go to myhonda.ca and create an account. You will see the exact pay out there.
Used to be able to do that but myhonda is redone now (looks cleaner and might be more functional). You now need your HFS account number to "unlock" the info on your financial account. You only need the VIN for basic stuff not pertaining to finance info tho. Anyways, I can't find my lease docs (to get account number w/o calling HFS) since we moved and I must have packed them away somewhere and forgot where....
Deal Expert
Aug 2, 2004
31103 posts
5358 upvotes
East Gwillimbury
FKEezy wrote:
Aug 6th, 2017 8:47 am
Why the hell would he pay the final 6 months and hand it back? If he is paying it, he might as well keep it! I'd sooner let the vehicle sit in my driveway for those 6 months than to hand it back early all paid for.

And how do you figure paying out a lease is different than paying out a finance? You can buyout a lease at any time and OWN it. Right now the buyout on my lease with honda is listed as $14400 - that's to own. Paying off a balance on a lease is no different than paying off a balance on a traditional loan.
He wants a new car now. He doesn't want to wait six months. Pay the six months and return it.

The difference between the lease and finance, if you read my post is the commitment. He's not obligated to buy out the lease. Return the car at the end of the lease term. You're obligated in a finance.
Newbie
Jul 30, 2017
91 posts
60 upvotes
Gee wrote:
Aug 6th, 2017 9:58 am
He wants a new car now. He doesn't want to wait six months. Pay the six months and return it.
Why return it though? If I were to have to pay for it all anyway, I would sooner let it sit in my driveway or lend it to a friend than let the stealership profit off of me. And before you mention insurance costs, if he were to get another car, it is actually cheaper to insure 2 cars than 1. So he will actually SAVE on insurance by keeping it. I just went through this with my gf, her insurance dropped $40/month when she added her new car she just bought, then went up $40/month after she dropped the old car she just sold off her insurance.

And no, he doesn't necessarily want a new car car today. He is just pondering - if he was to find a new car today, are there ways to get out of the lease by profiting or at the very least breaking even, and depending on the current payout(if he has positive equity) there may very well be ways to accomplish that. He is not willing to lose money, he will just ride out the duration of the lease that being the case. Your solution is already out the door!
Deal Expert
Mar 23, 2004
25193 posts
5451 upvotes
FKEezy wrote:
Aug 6th, 2017 8:47 am
Why the hell would he pay the final 6 months and hand it back? If he is paying it, he might as well keep it! I'd sooner let the vehicle sit in my driveway for those 6 months than to hand it back early all paid for.

And how do you figure paying out a lease is different than paying out a finance? You can buyout a lease at any time and OWN it. Right now the buyout on my lease with honda is listed as $14400 - that's to own. Paying off a balance on a lease is no different than paying off a balance on a traditional loan.
:facepalm: But if you're trying to get rid of the car why the heck would you want to pay the entire amount, when you don't have to? As he said on a lease you only have to pay the amount remaining on the lease. You have no obligation to pay for the residual. So-called "positive equity" or not, stealerships give you nothing on trade values so at best you might break even. Unless this is some kind of rare collector/exotic car that has really held value or even appreciated in value (and it's not it's CR-V lol) you're not going to gain anything in this situation. That is unless you're privately selling it for more than the remainder of payments + residual/buyout + taxes + admin fees would be-- which is again not likely.

You're right you might as well just ride the lease out until the end--it's easily the "cheapest" option. However if the Honda dealer can get you into a new car faster and basically with no more payments to worry about (remember stealers won't have to pay taxes and fees, and may even get lower buyouts from the finance arm so they can do stuff like this), then if you really want out of the car or really want a new car (or both), then might as well.
Deal Expert
Aug 2, 2004
31103 posts
5358 upvotes
East Gwillimbury
FKEezy wrote:
Aug 6th, 2017 10:05 am
Why return it though? If I were to have to pay for it all anyway, I would sooner let it sit in my driveway or lend it to a friend than let the stealership profit off of me. And before you mention insurance costs, if he were to get another car, it is actually cheaper to insure 2 cars than 1. So he will actually SAVE on insurance by keeping it. I just went through this with my gf, her insurance dropped $40/month when she added her new car she just bought, then went up $40/month after she dropped the old car she just sold off her insurance.

And no, he doesn't necessarily want a new car car today. He is just pondering - if he was to find a new car today, are there ways to get out of the lease by profiting or at the very least breaking even, and depending on the current payout(if he has positive equity) there may very well be ways to accomplish that. He is not willing to lose money, he will just ride out the duration of the lease that being the case. Your solution is already out the door!
You're preaching to the choir. I'm not disagreeing with you. He can ponder, he can dream about it. Doesn't matter. His options and contractual obligations are still the same.

I'm not encouraging him to return the car. But I can guarantee you, Honda Finance doesn't give a damn about what he wants. He owes six months and that's what he needs to pay.

Your insurance arguement is stupid. If you get a discount on the first premium, the second premium can be cheaper too, but when you add both together, you're paying more over all. Especially since you can't drive two cars at the same time.
Member
Oct 27, 2012
226 posts
64 upvotes
Gee wrote:
Aug 5th, 2017 7:49 am
There is a difference between a lease and a finance. If it is a lease, you can simply pay out the balance of the lease (6 months) and return the car to he dealership.

If it is a finance, you're obligated to buy the car. You're free to sell the car or trade it in to a dealer as long as the remaining balance and term is paid.

A lease has a residual value at the end of the term which you're not obligated to pay. A finance is a commitment to buy the car. There is no residual value at the end of the term. You own the car. If you sell it or trade it in, that's your prerogative and the value is determined by you or the buyer.

It sounds like you're in a lease. You have two choices if you want to get out now.

1. Pay the remaining 6 months and return the car
2. Put the car on lease busters and hope someone wants a short term lease.
Or Option 3: Trade it in. That is his best option if he wants out now. He'll be close to breaking even if it's in as good a condition as he'a saying. He might even be in the positive.

The only real difference between trading in a leased vehicle and a financed vehicle is that you do not save some tax on the new vehicle. If his trade-in quote is equal to his lease buyout + fee he's in the clear.
[OP]
Sr. Member
Jan 12, 2013
531 posts
469 upvotes
Halifax
For anyone who has been curious, I'm able to now get access to the buy out information, you can even print off an official PDF buy out quote now from the newly updated myHonda site. Regardless, this is how it lays it out:

Lease Payout Information
Customer Payout

Current Contractual Obligation: $21,011.53
GST/HST: $3,151.73
PST/QST:$0.00
Miscellaneous Charges: $0.00
Sub-total: $24,163.26
Less Security Deposit: $0.00
Total Payout Amount*: $24,163.26
Payments Remaining: 14

So in reality it doesn't really seem like I'm going to reach a positive equity situation before the next 6 months anyways due to the HST added to the buyout amount, and I guess its actually closer to 7 months than 6 as far as payments remaining goes.
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Jul 5, 2011
1411 posts
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Toronto
TBBA29 wrote:
Aug 7th, 2017 10:28 am
For anyone who has been curious, I'm able to now get access to the buy out information, you can even print off an official PDF buy out quote now from the newly updated myHonda site. Regardless, this is how it lays it out:

Lease Payout Information
Customer Payout

Current Contractual Obligation: $21,011.53
GST/HST: $3,151.73
PST/QST:$0.00
Miscellaneous Charges: $0.00
Sub-total: $24,163.26
Less Security Deposit: $0.00
Total Payout Amount*: $24,163.26
Payments Remaining: 14

So in reality it doesn't really seem like I'm going to reach a positive equity situation before the next 6 months anyways due to the HST added to the buyout amount, and I guess its actually closer to 7 months than 6 as far as payments remaining goes.
I can call a couple guys to ballpark the trade if you like (with real world numbers)...

Year, model, trim level, km's, equipment (leather, roof, nav, etc), accidents, awd/fwd, etc
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