The Credit Guy

Strategies for escaping a too-expensive auto lease


If you signed an lease that turns out to be unaffordable, you have a few options, but most aren’t pretty.

The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Dear Credit Guy,

I leased a 2006 Lincoln LS. I am upside down around $12,000. I want to terminate the lease. Can’t trade, can’t sell. We are seniors and are not worried about our credit. Right now it is stellar, but I think we were hoodwinked on this car deal. Will a repossession do anything except ruin our credit? Will they sue? We are having a hard time making payments but have continued to do so. Thanks.  — Liz

Dear Liz,

You will need to read your lease agreement to determine what is involved with terminating your lease early. Most lease agreements will include a penalty for early termination and many will require all unpaid monthly payments in addition to the penalty.

I would start by going back to the dealership that originated the lease and explain you are not happy and would like them to remedy the situation. If you are willing to purchase or lease another car from them, they may be willing to terminate your lease for much less than what is stated in your agreement. Honesty is the best policy here.

Be cautious about entering into another lease or finance agreement with your dealer. Make sure that you understand all the terms and that you can afford the monthly payment. One thing to watch for is the inclusion of any amount in a new lease or loan that is connected to your current lease. Your goal should be to terminate your current lease without including any money owed from that lease into another agreement with the dealership.

If you can’t come to an agreement or don’t wish to work with your dealership on another vehicle, then you have several options. One, you can take the vehicle back to the dealer and satisfy the terms of the early termination of your lease, which could be tens of thousands of dollars. Or two, you can let the dealership repossess the vehicle and then deal with the financial and credit consequences.

If you do not honor your lease agreement, the lease company is within their rights to take you to court to recover what is owed on the lease. If the lease company wins in court, they would receive a judgment for the amount owed. With the judgment the company can request that the court place a lien against any real property you or your spouse owns or garnish your wages.

The credit consequences of repossession are a significant drop in your credit score and the possibility that you would not qualify for a car loan or lease for several years. If and when you do qualify, it would probably be at a much higher interest rate than what you would have previously qualified.

One last option you could consider is to find someone willing to take over the terms of your current lease. Some leasing companies will allow your lease to be assumed by another person. That person would make your monthly payments, just as you would until the end of the lease. Several companies put together people who want out of their leases with people who are interested in assuming leases. Visit, or to learn more.

One word of caution: Most leasing companies that allow leases to be assumed do not remove the original leasor from financial responsibility. So if the person who assumes your lease does not make the monthly payment, the company will be calling you to make the payment.

Take care of your credit!

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

What’s up next?

In The Credit Guy

FACTA and the rules behind getting a free credit report

A federal law known as FACTA provides that credit reporting bureaus must provide a free copy of your credit report every 12-month period.

See more stories
Credit Card Rate Report Updated: November 25th, 2020
Cash Back

Questions or comments?

Contact us

Editorial corrections policies

Learn more