While you can’t refinance to get cheaper monthly payments for your lease, there are other options to save money, like buying the car or transferring the lease.

Written by Macy Fouse

Reviewed by Jessica Barrett

Updated on Jun 7, 2023

Table of Contents

How it works
Is it the best option?
The downsides
Other options
Finding car insurance

Load full table of contents

For some people, leasing a car instead of buying one is the best option. But if you can no longer afford the monthly payments—or you just want to cut some costs—refinancing your lease could be an option.

Refinancing a lease could be tricky to navigate, so

car insurance

comparison app

Jerry

has detailed all the ins and outs of it for you! Read on to discover your best options for refinancing, and to save on insurance costs with our

trusted quote comparison tool

RECOMMENDED

Haven’t shopped for insurance in the last six months? There might be hundreds $$$ in savings waiting for you.

Judith switched to Progressive

Saved $725 annually

Alexander switched to Travelers

Saved $834 annually

Annie switched to Nationwide

Saved $668 annually

How does refinancing a lease work?

If you need out of your lease agreement, you can “refinance” the lease—but it doesn’t work the same way as traditional refinancing. When you refinance a

car loan

, you can get a new interest rate, better terms, and possibly lower payments. But after you’re in a lease contract, it’s not possible to renegotiate your contract terms to get lower monthly payments.

If you’re struggling with monthly payments, your leasing company might be willing to let you delay your payments, but they’re unlikely to lower your monthly payment amount.

Refinancing your lease means you essentially buy your leased vehicle—you become the owner rather than your lessor. To go through with this, you’ll first need to find the payoff amount for your vehicle.

Find out your lease payoff amount. You can probably find this information in your lease contract, but you can also call your leasing company to ask directly. This amount includes the projected residual value of the car, the amount you owed with interest, and depreciation costs.

Pro Tip: Some companies don’t allow any wiggle room, but you may be able to negotiate your payoff amount. Find out the
Kelley Blue Book value
of the car. If the true value is higher than the buyout price, you’ll have equity and won’t need to negotiate. If the value is less than the buyout price, it’s worth trying to negotiate.

Get a loan for the payoff amount. Add together the payoff amount and your remaining payments, then secure a loan or find a refinance lender for the full amount.

Purchase the vehicle from your lease broker. When you become the owner of the car, you can either make the loan payments or try to sell the car to a dealership or private party. Selling to a private party will be more profitable, but a dealership is the better option if you’re looking to do a trade-in.

MORE:

How a car lease swap works

If you do refinance your lease, here are a few things to keep in mind.

If you refinance early on in your lease contract, you’ll still be responsible for the payments, which will be included in the lease buyout.

Refinancing means you’ll make monthly payments on the new loan rather than the lease. You’ll be free from any terms or fees related to your lease.

You could have lower monthly payments—but the amount depends on your credit score, loan interest rates, and the loan terms you agree to.

MORE:

Is it better to lease or buy a car?

RECOMMENDED

Thousands of customers saved on average $887/year on their car insurance with Jerry

This app is great, but the customer service is even better! Not to mention convenient! My husband and I got the lowest rate (much lower than the rates I was finding online through my own searches), quickly, and pretty much all through text message! Thank you so much for a hassle free experience👍

Gabriella R.

Find insurance savings

4.7/5 Rating on App Store

Is refinancing the best option?

Refinancing your lease may not be the smartest option for everyone. However, it might be the best option if you have a good credit score (700 or more) and want to lower your monthly payments.

More perks to refinancing include:

Avoiding mileage fees

Getting out of maintenance fees

Dodging wear-and-tear fees

Evading the lease cancellation fee

Refinancing is also a good option for you if:

You like your vehicle and wouldn’t mind owning it

You want to get out of your lease

before it expires

The value of your vehicle is higher than the quoted buyout price

Refinancing may also protect any equity you have in the lease. If the lease buyout price is less than the true value of the car, you won’t lose that difference if you sell the vehicle.

Key Takeaway: Refinancing is a good option if you have a good credit score, want to own your car, and the value of your car is more than the buyout price.

What are the downsides to refinancing a lease?

If waiting until near the end of your lease to refinance isn’t an option, be aware that refinancing your vehicle during the lease could come with hefty fees and extra costs. Depending on your contract, you may face an early termination fee anywhere from $300 to $500. Your leasing company may charge additional fees, as well.

In addition to the fees, you’ll also be stuck with the cost of any applicable state taxes, transfer costs, and any possible purchase options. With a new car, these could add up to a steep price in the thousands.

You’ll need to include these costs in the new loan you take out. Because of these added expenses, your loan terms may have higher monthly payments or interest rates than the original lease.

There’s also a possibility that the payoff amount is more expensive than the value of the car, and you’ll be responsible for paying the difference if you sell.

MORE:

Gauging Kelley Blue Book’s accuracy

RECOMMENDED

Compare auto insurance policies

No spam or unwanted phone calls · No long forms

ZIP Code

Find insurance savings

What are my other options?

If refinancing your lease doesn’t seem like your best bet, you do have other options for getting out of your lease.

Transfer your lease

Depending on your leasing company’s rules, you may be able to transfer your lease to another person. Transfers will come with a lease transfer fee, which could range from $200-$550, but then you’re out of the lease and someone else takes over.

Some companies don’t permit transfers at all, and others only have restrictions on the first six to 12 months of the lease. Even if your leasing company allows transfers, you’ll want to look into the terms of a transfer. Some companies hold the original lessee liable if the new leaseholder fails to make payments or even damages the car.

To find someone to take over your lease, websites like

SwapALease

and

LeaseTrader

can help with the matching process and paperwork.

MORE:

Here's what happens if you total a leased car

Return and lease a new vehicle

Another option to get out of a lease is to pay the termination fees and lease a new vehicle. But just like breaking a lease agreement for an apartment rental, breaking your car lease comes with a cost.

To replace a car lease, you’ll have to pay an early termination fee and the depreciation cost of the vehicle. Both of these together can cost thousands of dollars, so be sure to compare these upfront costs with the money you expect to save during your new lease.

If you need to get out of your lease for financial reasons, this may not be the best option for you.

Find a lease pull-ahead program

Some companies and dealerships have lease pull-ahead programs, which allow you to skip the last few months of payments of your lease, return your car early, and lease a new vehicle from them.

The two main types of lease pull-ahead programs are from the car manufacturer or the dealership.

Carmaker’s pull-ahead programs are likely to be clear-cut. They usually waive between three and five payments, or they may waive excessive mileage or wear-and-tear fees. The manufacturers are willing to spend money to earn your loyalty, so they’ll be transparent about the terms.

Dealership’s pull-ahead programs tend to be more difficult to interpret. They may use vague terms like “low payments” or “little out-of-pocket” costs. The offers could be different for different customers depending on several factors, so be sure to read the fine print or inquire directly.

This is a good option if you want a new lease with cheaper monthly payments, or you expect to go over your current lease’s mileage allowance.

Buy a new car from the same dealership

Some dealerships may offer to buy out your lease if you buy a different car from them. This is typically offered in the last year or six months of your lease. Depending on the company, they may still charge a lease transfer fee, so read your contract thoroughly.

With this option, your remaining lease payments are forgiven, and you can choose a vehicle with more affordable payments.

Key Takeaway: If refinancing isn’t for you, you can still transfer your lease, lease a different vehicle, find a lease pull-ahead program, or buy a different car from the same dealership.

MORE:

How a Honda lease buyout works

How do I find the best car insurance for my leased vehicle?

Whether you decide to buy out your vehicle or keep leasing, you’ll need the best car insurance coverage,

Jerry

is the easiest and most effective way to find a car insurance policy that is customized for you.

After providing you with a comprehensive cross-analysis of the best policies across dozens of providers, Jerry handles the phone calls, paperwork, and renewals for your top pick so that you don’t have to. They even help cancel your old policy!

“
Jerry
found me a Progressive insurance policy that saves me $55/month compared to my previous plan. I would recommend Jerry to anyone to double-check that you’re getting the best rate.” —Sonya J.

RECOMMENDED