Multiple Options For Terminating A Car Lease Early

Are you looking options for terminating a car lease early? Since the pandemic began, there's been an increase in people looking to terminate a car lease early to save money.

In difficult times, it's important to cut costs and boost savings. With a potential recession on the way, terminating a car lease can sound like a logical solution. However, there are costs associated with doing so.

During my latest car hunting process, one of the questions I had was what to do with my three-year lease agreement with 12 months remaining.

I decided to lease a Honda Fit for my business for only $235/month after tax. About 80% of the cost is deductible since I primarily use Rhino for going to conferences, visiting consulting clients, and giving the occasional Uber ride when they are going my way.

When I was in my 20s, I'd always just pay cash for a vehicle and flip it a year or two later for even money or a small profit. I loved the hunt and the negotiation process. As I got wealthier, I put more value on time and simplicity. I wanted minimal maintenance headaches. I also wanted the option of just handing the keys in when my lease term was up.

But due to the desire of owning a mid-life crisis car and only having one indoor parking spot, I wanted to learn what my options were for an early lease termination.

Here are your options for terminating a car lease early after speaking at length with a couple vehicle leasing department personnel.

Options For Terminating A Car Lease Early

There are eight options for terminating a car lease early. Some are obviously better than others.

1) Pay off all remaining lease monthly payments.

This is the dumbest option you can choose because you presumably want to get out of your lease or no longer want the car. There's no advantage paying off the remaining monthly payments and returning the car to the dealer.

2) Sell your car back to dealer.

The dealer will probably low ball you because they know you are either in a financial bind, got to move, or simply don't want the vehicle. Dealers have overhead to cover and should expect to make a profit for taking on the risk of buying the vehicle.

3) Transfer the lease to a third party. 

Try finding a third party, friend, or family member to take over your lease. There's less of a financial hit to you as there's simply a transfer of the lease agreement. Check to see if there's a transfer lease fee (BMW has one that costs ~$500), a fee for the leasing company to check your credit to see if you qualify, and a new registration fee.

4) Sell your car to a third party. 

If the third party pays off the vehicle with cash, you will get the title in the mail and then have to transfer the title. If the third party refinances the lease through a credit union or bank, the credit union or bank gets the title. You must have a conversation with the financing company and dealer to make this transaction happen. This method can save you money, but it will take time.

5) Pay off the vehicle in full and keep it.

Ask the leasing company how much it would cost to pay off your vehicle in full. Once you do, you will no longer have lease payments. After 20 months of lease payments, I can pay off my $19,200 pre-tax Fit for $15,792.48. If I continue paying the lease for the full three-year term, the residual value I will pay is $12,746.75.

6) Buy out the lease with a credit union or bank and change lease to purchase vehicle.

If you want to keep the vehicle, you could go to a credit union or bank to finance the vehicle by having them buy out the lease. The credit union or bank would have title until you pay them off. I'm not sure why you would select this option unless you have terrible lease terms.

7) Trade your lease in for another lease.

Car dealerships love this option because they get to lock you in for a longer period of time. They want repeat customers who will provide them with steady profits. They will do all these backend calculations to ensure they make a profit while also making you feel you got a deal with your new lease. Just make sure you do the math to see if you really are.

8) Voluntary surrender.

This is the worst option. A voluntary surrender is when you stop making payments, hand the keys back to the dealer, and tell them you have nothing left to give. The car dealership will either try and resell the vehicle on premise, or sell the vehicle at an auction. You will see a 7-10 year black mark on your credit report.

What Is The Most Common Car Lease Termination Option?

According to the Honda leasing specialist, he said most people do the following after knowing their options:

1) Sell the vehicle back to the dealership and take a financial hit. The benefit is convenience. Most people who go this route are relocating.

2) Try and get a third party to take on the lease for a smaller financial hit. You might as well throw your ad on Craigslist and see what happens if you have time. Maybe someone would love to lease your car less than 36 months, especially if there is no downpayment or transfer taxes.

3) Own up and fulfill the lease agreement until the very end. Doing what you say you will do is always a good thing. For example, if everybody paid their mortgage, the financial crisis wouldn't have happened.

Do The Math To Choose The Best Car Lease Termination Option

options for terminating a car lease

When you call the leasing company, always ask three things:

1) How much would I have to pay to buy the vehicle outright?

2) What is my residual value (the amount you get to buy the car at the end of your lease term)?

3) What is the total amount left on my lease payments?

Getting the answer to these three numbers will help you decide whether to terminate the car lease early or not.

Take how much it costs to buy your vehicle outright, subtract the number from the residual value, and compare the number to what's remaining on the total amount left on the lease payment.

The difference is the PROFIT the car dealership is making, or the extra money you are willing to pay to not have to buy the car outright.

In my case the math looks like this for terminating my car lease:

$15,792.48 to buy my vehicle outright today

– $12,746.75 the residual value after the three-year lease is up in September 2017

= $3,045.73

My total lease payments remaining for 16 months is $3,761.12.

– $3,045.73

= $715.39 is the dealership's profit, or how much extra I have to pay if I don't buy the car up front. Prior to taking on this lease 20 months ago, I calculated that I would basically be paying a ~$1,100 premium to lease this $19,200 car instead of paying cash for it. Paying $1,100 extra over three years was worth it to me because I value the option of being able to turn in the key.

I have no desire to buy Rhino for $15,792.48 today because I'm thinking about getting a mid-life crisis car now or when my lease is up.

Perhaps I'll grow more attached to Rhino one my lease expires and want to own him outright for only $12,746.75 after I build a second parking spot.

In the end, I decided to be responsible and drive Rhino until the lease expired and return him. A couple months before the lease expired, I bought a Range Rover Sport with 10,300 miles in cash.

I like being able to buy a car in cash and drive it for the next 10 years. Having more flexibility feels good. Looking for options for terminating a lease never felt right with me.

Related: When Is the Best Time To Buy A Car?

Making The Least Bad Lease Termination Choice

Purchasing a car for more than 1/10th your income isn't necessary. However, we're a rich nation full of excess, so it's sometimes hard to restrain ourselves. We sometimes take on a car lease to make ownership “more affordable.”

Leasing a vehicle can be risky because it enables us to drive a vehicle that we might not be able to comfortably afford. But on the flip side, leasing a vehicle can keep the most avid car enthusiasts disciplined due to the hassle and penalties of terminating a lease early.

Before signing a car lease in the future, know all the options for terminating a car lease early. As we all know, life happens.

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40 thoughts on “Multiple Options For Terminating A Car Lease Early”

  1. I have 14 months to go on my lease , if I just suck it up make all these payments in the end will my credit go up as soon as the lease term ends ?

  2. I have never been able to stomach leasing a car. I know it’s a depreciating asset, but I’d still rather buy it and own it. I can then sell it and get some of my cash back one day.

    1. Natasha senuk

      I had paid out my lease three years early with him in Alberta and the total price I paid out was the price that was on my original lease total for it as if I kept it for the full lease are they allowed to do so or do they owe me money

  3. I lease a subaru and had accident but fixed it through subaru dealer.But 1 year and half after leasing i need to go overseas and i cant keep the car.Does anybody have this kind of situation?

  4. I have a question. I have four months left on my lease and wondered can I turn it in and continue to make payments so I can drop the insurance?” I am out of miles on my car and was trying to save some money before I have to lease or buy again. I have a car we bough out right so this would save me money until the time I decide to lease or buy again, probably in the fall when my daughter starts to drive.

    1. My exact situation now. Did you ever figure this one out?
      Any advice or insight will be greatly appreciated.

  5. Jenny Johnson

    Recently Leased a Cadillac XT5 after driving Sedan for 50 years. Don’t like it. Doesn’t have the options salesman said. Put $22,000 down on a 36 month lease. Dealer wants me to resign a new lease due to a mistake they made supposedly in my favor on taxes. I would like my money back and turn in the vehicle. I could have bought the car outright. What are my options. Dealership will not email me the contract they want me to resign. No one went over the numbers one I stupidly signed. Lesson learned.

  6. All –

    interesting blog and learned a lot. Thank you! I am currently in a situation where I will need to leverage gap insurance if BMW still provides it in the lease. I’ve leased a new (at the time) 2016 340i for 36 months (in month 20 currently). Love the car, and was probably going to keep it at the end of the lease. I did the math …. and not quite understanding my options. I whacked a concrete wall on a freeway on ramp, pretty hard, and looped the vehicle and caught right front and rear corners (front suspension|steering damage, too). Insurance accepted the first quote to repair ($9,500) …. but learned today the BMW collision center is submitting a supplement approaching $26K. Ouch.

    The numbers:

    16 months remains on lease, $7,103
    Buyout quote: $38,631
    Residual: $33,916

    Do I have any favorable options here?!

    BTW – BMW finance requires all repair be done by BMW certified mechanics as a term of the lease.


  7. Oh man, this is turning me off to leasing more!

    I think I’ll stick to buying used and driving the car to the ground… So simple!

  8. Great post, perfect timing for me because I’m looking to get out of my lease early! One question though, don’t you have to factor in the downpayment you paid into the “dealership profit”?

    1. Cash down or trade equity carried into the lease contract applies as a cap cost reduction and essentially buys down your monthly payment. It is “dealer profit” in the sense that it is part of what you have paid to use or lease the vehicle but it is not subject to rent charge. It works just like putting cash down when you finance a car–in that is doesn’t lower the selling price but it does lower the amount financed and therefore lowers your monthly payment.

  9. Hey Sam! Love your blog! First time commenter.

    Generally speaking, there is no great way to end a lease early. That said, trading out of any new car within the first year or two you are assuming the most risk for vehicle depreciation regardless of whether you leased, paid cash, or financed.

    The $715.39 in your example is not -I repeat NOT- dealer profit. At least not necessarily. That amount represents unearned rent charge factor. Rent charge functions similarly to interest rate. When you pay off the remaining lease payments early (or buy out the vehicle entirely), you have essentially made a “payment toward principle” and it cuts your total payments down by saving you that amount of interest.
    Now, a portion of that $715.39 could represent some dealer profit (insofar as the entity arranging the lease on your behalf gets paid to go to work each day and arrange said financing options–you win some, you lose some but it averages a net), but it also represents some portion of interest from the finance company, i.e., Honda Financial Services.

    @Cash Flow Celt –it’s possible that your mom got hosed. It’s possible her credit is not stellar and she’s paying for it in rent charge/interest rate. It’s also possible that she rolled negative equity from a trade-in into her lease, which is expensive but in some cases is simply unavoidable. VW Credit has extremely aggressive lease programs, so it’s also possible that the Toyotas just don’t lease as well (I don’t have much experience with Toyotas)

  10. Sam, in your last paragraph you mentioned that a lease gives us the chance to drive a car we might otherwise not be able to afford. I don’t really see it that way. Leasing is not renting, it’s not a “cheaper payment” – it balances out. Now, you will get a lower MONTHLY – and I guess that classifies as buying a car you may not be able to afford, but the numbers over the actual ownership of the vehicle are roughly the same.

    I’m a terrible writer, but I’ll try and explain my thought process. Take a $50k car. According to BankRate auto loan calculator amortization, if you buy the car with a 60 month loan, after 36 months you would only owe about $21k on the car. Over that same period with a lease, you paid it down to $32,000. (assuming residual of .60). Residual is based on what the car should be worth after 36 months. If you buy the car, you sell it for $32,000 and pocket the $11k you “overpaid” compared to the lease.

    Why I prefer a lease, especially if you like to get a new car every 3 years or so, and if the mileage works for you, is that you only pay for what you use. All cars (generally speaking) eventually get sold. So a lease is no more a “rental” than buying the car anyways. It’s just how you manage your money during the process.

    Of course, getting a good money factor and decent residual is paramount when leasing. People can get screwed easily. It’s also important to know how leases work when negotiating. Even with a lease, negotiate that SALES PRICE of the car. This is beautiful, since the residual is based on the MSRP and doesn’t change. So every dollar you negotiate down, say $2k, is money you will put right in your pocket over those 3 years.

  11. I realize this is a write-off as a business expense so you’re less concerned about the cost than you would if it were coming directly from your pocket.

    But that said, midlife crisis cars are such a huge waste of money, I have to caution you against it. Higher up front costs. Higher insurance. Higher maintenance costs. Less reliable. I made that mistake, to a lesser degree. I hope you don’t make it too.

    1. Anything above a decent $8k used car can be classified as a waste of money. It’s all about perspective.

      At a certain point, you may be earning enough to justify spending $100k on a car. If it fits within your budget and comfort level, I’d say go for it. A stunning car is a big deal for a lot of people and really brings a lot of joy. And for others, they regret is a month later.

      1. I think if you just buy a subjectively “stunning” car, you’re more likely to have buyer’s remorse down the road-people also buy more expensive cars for the performance-there are people who run their Corvettes, Porsches and Ferraris on the track occasionally. But those buyers tend to study the brand and know what to expect.

  12. Wow, I had no clue the lease option worked like that. I always assumed that when you lease a vehicle, you can dump it back on the dealership with no strings attached. Lot’s of great information here.

  13. My mother is in a bind right now too. I was helping her with her finances and she told me how much she was paying for her lease — $327/month for a 2015 Toyota Corolla. She’s paying more for that car than her previous VW Jetta. I was appalled. She got taken by her salesman.

    So now I’m left trying to pick up the pieces and find a way out of her lease that won’t be too painful financially. What’s ridiculous is she actually has good credit. They just took her to the cleaners because she doesn’t know better. This, just like the last one, was an incredibly relevant article to me right now. Thanks FS.

    1. Go back to the dealership to renegotiate, write a letter to Toyota USA and definitely write a bad Yelp review.

      For the average car buyer a lease is a bad idea because there are variables that aren’t easily understood. If you’re savvy, leases can be great but there’s no great options on early termination.

      1. She’s about 16 months into the lease at this point. I told her she needed to downsize from her lease on the Jetta because she’s nearing retirement and only drives 7,000 miles a year anyway. Having an average, reliable car for her would be optimal because of the low payments and below average time she spends using the vehicle anyway. She did not take my advice.

        After mulling the options, it looks like she’ll take a $2,500 hit to do early termination and save about $2,400 in the payment differences by downsizing so it’s kinda moot at this point. But I’m peeved nonetheless.

  14. did you finally buy the dream car? is that car in the pic yours, or just one you are looking at.

    1. Nope. Got to finish my never ending mortgage refinance first. Fingers crossed it will be all said and done by June and I’ll have happy post to share the resolution!

      The car in the picture is one I’m looking at, but the asking price is too high. I’m happy to wait.

      1. gotcha. It’s definitely a good idea to shop around and wait for a good deal to come across for a purchase that large. I would do the same. No need to rush into it.

        Was about to ask you why you leased rhino instead of buying, but just noticed the hyperlink to your old post talking about it. You could always wait another couple of years, and get a Tesla model 3! personally though (from someone younger / with less NW and disposable income) I am very weary about buying new cars.. I drive a 10 yr old Accord and love this car and plan on driving it until it falls apart or the maintenance bills get out of hand.

  15. The Green Swan

    Hard to find a good, easy option for ending a lease early, that’s too bad. I’ve always bought my cars in the past and then hold onto them until they die.

  16. Carmax is a great option as Michael mentioned. I got a bid to sell a previous car there which wasn’t great and one year later I went back and with 15+k more miles on the car surprisingly was offered 1k less and what I felt was above market. The used car market was and maybe still is booming so I imagine they take into account expected financing gains too in their purchase price to some degree.

    I also tried to sell them a M3 and they bid about 10k less than it was worth, I don’t think this was their bread and butter type of car.

    A friend was trading in on a new Mercedes and got a bid at carmax beforehand so was also useful for negotiating that transaction. They eventually bid 500 less for it so he said I’ll just drive it down the street and drop it off at carmax then. Mercedes dealer was almost surprised he was willing to do this, but 500 for an hours time, why not?!

    Their offers are good for a week which gives time to analyze the options.

  17. Apathy Ends

    Don’t have a lot of experience in car leases (we bought our last car) but writing off your car as a business expense is great advice – we have a family LLC and I need to check further into the tax write offs.

    Best advice for buying new cars – wait for the dealerships to get desperate and take advantage of the low financing – we got .9% on our CRV which is under $600 in interest over the life of our loan

  18. With mandatory gap insurance, one option would be to smash the car into something. Probably not the brightest plan, but it might actually end up cheaper than some of the others.

    I can’t stop my dealer from calling, because right now my leased car is worth more than the buy-out with about 4 months to go. They way underestimated the residual. They’re hella excited about me turning it back in to them that they’ll take it back right now no charge. I haven’t decided yet whether to buy it to keep, buy it out to sell, or just turn it in. We’re dropping to a single car anyway. The latter option is the easiest, with the middle option possibly putting money in my pocket in return for some annoying work re-selling the thing.

    1. Ah, very interesting about the dealer underestimating the residual based on your lease terms. So they just want to buy it back right now so they can sell it for a profit? Your obvious move is to just hold it for the next 4 months or ask them to give pay you to turn the car lease in early no?

      I bet you’ll enjoy dropping down to a single car. I’ve never had anybody not enjoy simplifying life.

      I wonder if $12,746 residual value on my Honda Fit is low too? Seems dirty cheap for a perfect condition car with likely under 25,000 miles after 3 years.

      1. Buy back to sell for a profit is my guess. It has an ~$12k residual with a $15k private market sale value right now in my area, with sticker at the dealer about $17-18k. Trade in is around $13k. This might be a very weird local thing, since we have one dealer and these cars seem very hot in the past two years.

        We’re definitely keeping it through the term. At that point, I’ll decide whether or not the spread makes it worth my time to buy and sell. There is a sales-tax concern, too, that could eat a lot of potential profit. Although, not really a “profit,” since if they set the residual correctly, then the lease would have been cheaper. TANSTAFL.

        1. Just remember that if you buy it out with the intention to re-sell it at a profit, you may be on the hook for sales tax and/or registration fees. Talk to your local DMV so you know what you’re really on the hook for. The dealer does not have those obligations.

          Wrapping the thing around a tree to skirt a financial obligation is a funny thought but a terrible idea. Just a guess: there are about a hundred thousand ways that could blow up in your face if you pursued that course of action.

          Also, you make a good point about the lower residual. It costs you more on the front end. However, the lender sets the residual values, NOT the dealer, fyi, so there is nothing the dealer can do about that. Okay–If you went down to “Jim’s Auto Barn”, or whatever independent seller, they may underwrite all their own loans & leases (“buy here, pay here”). This is not the norm at franchised auto dealers.

  19. This is good article, it’s sounds like you did a lot of research. Most articles on getting a lease are misguided and but this one is spot on and lays out most of the options. I’m a car salesman and I wanted to add a few things.

    -#1 Can be a good option if you are close the end of your term and the car has depreciated unexpectedly. Ex. You lease a Suburban and gas goes up to $5 per gallon. The value of the car is going to be worth well less than the buyout.

    -#2 Also try taking your car to CarMax and see if they can offer you more money.

    -#3 There are some websites that help you do this such as Do a google search for “lease swap”

    -#4 Bear in mind when evaluating trading your car in vs selling it privately that in most states there is a sales tax advantage to trade your car in. If you buy a $50k. car and have a $10k. trade in, you only have to pay sales tax on $40k.

    -#7 Since you have to roll over the negative equity from the lease into a new loan, it keeps the payment more reasonable if you stretch out the term. If you are flipped $6k. that is going to add $250 a month into a 24month lease but only $125 onto a 48month lease.

    -#8 is a voluntary repo and shows up on your credit as such. This will kill your ability to get a loan and secure a low interest rate. If you go this route, get the new car first and then do the repo. If you had a cosigned it shows up on their report to.

    Another more nefarious option is if you have gap insurance, leave the car unlocked with the keys in the ignition in a sketchy part of town. With gap, insurance compensates you for the buyout on the car rather than the value. Nearly all leases come with gap.

    I’d be glad to help you get a new car. Before I became a salesman I got my new $27k Mustang for $19k and I negotiated a $58k. Cadillac for my mom down to $36k. I’d be glad to help you find a great price on a car. I have no vested interest, I’m not going to make any money from helping you, I’d just be glad to help you out since you’ve taught me a lot through your blog. Just let me know how I can get in touch with you.

    1. Never heard of the gap insurance / leave your car unlocked strategy. Quite nefarious indeed!

      Thanks for offering to help buy me a new car used car. I might take you up on your offer! How about a 2013 Porsche 911 Carrera S with less than 18,000 miles on it and 20″ wheels w/ tiptronic?

      1. From what I hear, one of the best things about buying a Porsche is the owner’s club. It’s the best owner’s club of any manufacturer and given that it’s a Porsche, you’ll meet a lot of successful people. Are you planning on driving the car on the track?

        That’s considered to be the best generation of 911’s (they call that a 997.2). It’s more pure than the 991 that replaced it mostly due to the hydraulic power steering. After 2009, the 911’s came with the 7 speed PDK not the tiptronic. I’d recommend getting it checked out by a independent porsche shop, to do a pre=purchase inspection ( Make sure you check the Carfax on it, sounds obvious but you would be surprised how many people don’t.

        I’d also recommend considering the Boxster and Cayman. Maybe you really wan’t the 911. But if you are open to the idea, the Boxster/Cayman handle better, are more fun to drive, are nearly as quick and are about half the cost. Most journalists say the Cayman is better than the 911.

        Are you buying from a dealer or independent seller? I’ll give more advice based off that.

        For a used car, I’d say memorial day weekend is not the time to buy. There are no special rebates on used cars for memorial day and the dealers will be jammed packed. I would go during a slow time for dealers like a tuesday afternoon. You’ll get in and out quicker and dealers will be more willing to negotiate when you’re the only person in the showroom.

        1. Made a mistake up there^. Actually the 13 is the first year of the new bodystyle known as the 991. I was thinking of the older body style.

          The 991 is supposed to be more comfortable than the 997 and faster around a track at the expense of steering and chassis feel; it’s more sterilized. Depending on how you are going to use it it may or may not be better. The engine is basically the same. I’d drive both and see which you like better.

    2. Hello Michael, I want to run away from my current 2014 911 Carrera S Convertible lease (still 18 months left) and lease the new 2017 Maserati Levente.

      KBB said my current car value is around $74,000 with 31,500 miles.

      Is there any recommendation from you?

      Thank you,

  20. There are a few alternatives ideas to consider:

    “Pull-Ahead” : most of Luxury car makers allow a few months early termination (3-5 months typical) – free of cost – so long you are leasing another model of theirs. By doing this say 5 months ahead of actual lease ending — you are still allowed “full” mileage of your previous lease!! (this option helps a lot with mileage over-users, not much helps with getting out of payments). If you can find a decently discounted model and finance rate ., you could potentially score “lower” payments, or have dealership thru free maintenance etc, on your newer leased car !! But – you are stuck with same manufacturer/make, different model — may be. And – much longer lease period due to renewed longer term !! Also – one more good thing with this: no need to pay lease-termination/car-return fees at the end of lease (usually $200 for non-luxury cars, and $500 for most luxury cars)

    Have not played much with SwapALease etc sites – but could consider for a set price .. in addition to craigslist..

    If you keep your Rhino little longer – its possible that as gas prices increase further — its “market” value could increase! Trading-in this one for another lease may not hurt you as much. A year ago – when gas prices were $4, one of friends — actually “made” money trading-in his fuel sipping Honda “CR-V” more than his “residual” would have allowed ..

    What if the car gets total’led in an accident, got hail-damage, or flood, or theft etc!? Hope your manufacturer provided GAP insurance, or you bought it outside! Most of Luxury car makers provides GAP “free” automatically for a lease — but non-luxury makes typically do not offer it free.

    One more option to consider is: some of the luxury car-makers offer PrePaid lease (I know its a rat hole, but worth to some to consider) — this will waive most/all of financing costs, and in some States, they will also “eliminate” State Sales TAX !! (in some states – you pay Sales tax on “full” capitalized/purchase price of vehicle UPFRONT, though this could be rolled-into lease payments, but you will pay it nonetheless !!). You could be talking about saving $200-$350 a month on medium-to-high end luxury car payments !! Where do you get that kind of returns these days ?

    If you keep both cars (know you mentioned not possible due to “parking” issues), you could potentially write-off full 100% cost of 2nd car lease towards business use — so long you dedicate 2nd car for personal uses! Say your mid-life crisis car is about $1000/month, and you are able to deduct only 80% of it for business use, this leaves $200 NET payments from you. If you can keep both cars, and use Rhino for “personal” use, and use “mid-life” crisis car for “all” business-use, you could deduct full 100% of the $1000 payment for business (while use that $200+ NET payments to pay for your Rhino) — do check with your trusted CPA. This is still “more” expensive than simply having one car/lease., but not as bad as you may think .. (ofcourse: you still have to add insurance costs for two cars etc; but with multi-car discounts, and having “normal” car in policy — “two” car policy may not be much more expensive than ONE “sports/mid-life-crisis” car alone). Hey, at least you can hop in with some occasional ride-share income to make up for increased costs :-)

    As far mid-life-crisis car, due to its higher-payments: 1) wait till you finished with your recent Refinance closes 2) Know ahead of the time that — you may be stuck with higher payments, and HIGHER Debt-to-Income ratio for foreseeable future — thus preventing future ReFi’s or potential future new Mortgages! 3) Or lease the car in your Wife’s name — thus “freeing-up” Debt on your name – when you need to Qualify for future ReFi’s or purchases !! This should segue into new Topic: “How it actually helps YOU to keep your Spouse’s Credit and Income in good standing” (besides 10-year income for her/him — pays off rewards with “SSDI”, “Social-Security” and “Medicare” eligibility on-her-own when mid-life is over!)

    1. SC,

      Such a great comment! Comments such as yours is one of the main reasons why I love to write on Financial Samurai. Thank you!

      I have never heard of the Pull-Ahead agreement, so that’s good to know.

      Very interesting insights about the value of Rhino increasing the higher oil prices get too. Saving money on gas was definitely one reason for buying a Honda Fit w/ a 32/38 city/highway EPA rating.

      I actually can own two cars despite only one indoor parking because there is plenty of free outdoor parking outside my house. I just need to move the car during street cleaning or else I’ll get a ticket (have forgotten before).

      Nice tip on being able to deduct 100% of the second car payment if used primarily for business. It’s interesting, b/c based on my current revenue, $235/month after tax is so low for a car lease. I don’t notice the cost each month at all as it is auto-deducted. Why not kill two birds with one stone and lease a luxury automobile at age 40 and have it as a deductible business expense right? I guess b/c at the end of the day, my business is still paying for it and no business needs a $80,000+ car.

      Finally, EXCELLENT job highlighting NOT getting a bigger lease BEFORE finishing a refinance. It’s the same as refinancing before leaving a job. I don’t plan to lease a more expensive vehicle or write any large checks before my refinance is done. The banks will indeed look at everything.

      What’s your background again? I truly value your comment.



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