What Happens At The End Of A Car Lease?

Driving a new car is one of the best feelings in the world. You have all this new technology around you, the most comfortable seating ever designed, and all the new safety features to protect you and your loved ones. The issue with driving a new car is that buying one can be expensive. Car prices these days are significantly higher than they’ve ever been, and it makes purchasing a new car difficult for the average person.

This is why in recent years, leasing a car has been gaining more and more popularity. Some people swear by leasing, and others think that it is a terrible idea and refuse to give it a shot. In this article, you’ll learn what a car lease is, how it works, and what happens at the end of the lease. We will also discuss a few lease-end tips to make the process even smoother, so let’s get started!

How Does A Car Lease Work?

The reason that car leasing has been gaining popularity in recent years is that it allows people to get their hands on a new car that they either typically wouldn't be able to buy outright or wouldn't want to be stuck with like they would if they purchased it. Buying a new car is a commitment. If you are buying a new vehicle, it will typically be financed over 5-7 years. After the years of the financing is up, the car is yours and you can do as you please with it. During that time, however, the car is technically owned by the financing agency, and it is difficult to sell or get into a new vehicle.

With leasing, people can get into and out of new cars regularly. An easy comparison to leasing a vehicle that makes it easier to understand is to compare it to renting an apartment or a home. Leasing a vehicle is similar to renting it. You pay a monthly payment to lease or "rent" the car, just like you would if you bought it. Instead, the monthly payment is usually much lower than purchasing it, and once the lease term is up — typically after one to three years — the dealership takes ownership of the vehicle back over and you can then lease a new one (or you do one of the other two options you'll read about below). It's a great way to consistently upgrade your car every couple of years without having to shell out the money to actually buy a new vehicle every year. 

What Happens At The End Of A Car Lease?

As alluded to previously, there are three main options that someone who leases a car will have once the lease term is up: swapping it for a different lease, walking away, or buying the vehicle outright. 

The first and typically most common is to allow the dealership to take ownership of the vehicle back again while you upgrade or swap it out for a different lease. This is usually one of the main draws of leasing a vehicle, as it allows you to upgrade to newer models of the same car or to consistently try out new cars entirely regularly. Many people who lease vehicles choose this method so that they can always have the upgraded models of the vehicle that they like without having to pay the expensive price of buying the car again and again. Consequently, this also means that there will always be a monthly payment since you would never actually gain ownership of the vehicle. 

The second option for the end of a lease is to simply let the dealership take ownership of the car again, and you just walk away. This could be the decision you make for a variety of different reasons, but it’s as simple as walking away and getting a car through a different route. Maybe you decided that you didn’t want to lease anymore, or maybe you found a great deal on a car elsewhere that you would like to buy outright. Whatever the reason may be, this option simply cuts ties with the leasing process and that’s it. You no longer make monthly lease payments, and the dealership takes the car back just as they had it before you started leasing it.

Lastly, there's an option which has also been gaining in popularity over the years, and that is to buy the vehicle outright after the terms of the lease are up. This is a great option for people that have fallen in love with the vehicle that they're leasing and decided that they just want to buy it. What will usually happen in this case is that the dealership will typically put the amount that you've paid through the lease — or at least a large portion of it — towards the purchase price of the vehicle. Then you can either finance the remainder like normal or pay for it all at once. This method of leasing to own is a great way for people to test out a vehicle they think they might want to buy, for an extended period of time (the lease terms). It’s a good way to make sure that it's a purchase they truly want to make. 

Tips For The End Of Your Lease

As with most things in life, there are usually a few things that you can do at the end of a lease to better the terms a little bit for yourself or to make the process as smooth as possible. Here are a few of the tips to make the end of your lease as painless as it can be.

Return all equipment — if the vehicle has any equipment, such as a jack or a truck bed cover, be sure you bring it back with you! If not, as you may expect, you’ll be charged a premium for it!

Have the vehicle well-maintained — This is one of the biggest fallacies of leasing, that the dealership will cover all repairs needed for the vehicle. While the lease may cover certain things, typical wear and tear are usually up to the person leasing the vehicle. Don't bring the vehicle back with bald tires or a cracked windshield, because you'll be getting charged a premium.

Know what you want to do — Don’t go back to the dealership without a gameplan of what you’re planning on doing. If you want to buy the car, have that in the back of your mind. If you know you want to walk away, don’t let them talk you into another lease!