Economic downturn, family problems, divorce, too much debt, need to pay for school. There are numerous reasons one might need to break their lease contract. Don’t be discouraged. It is a frequent occurrence.

The first thing you need to know is that a lease is a legal binding contract that is good for the term specified. Unfortunately you cannot just stop the payments and return the car to the dealership (I wish it were that easy). If you are in thee position where you need to break your lease contract, then the first thing you need to do is decide on the strategy that best fits your circumstance.

There are several ways to rid yourself of the burden of the lease payments. First, you can find someone to take over your contract and finish out the lease payments. Search the web to find marketplaces specifically designed for this. This process can take months because it requires a lot of coordination between the future lease holder, you, and the bank/financial institution. Another drawback is that, depending on the miles used and length of the lease leftover, it may require an outlay of cash to add incentive for “buyers”. However, this can be a great way to do it.

If you have the ability. The most cost effective way to go about solving the problem is to go ahead and buy the car outright from the financial institution and sell the vehicle as a private seller. You will get the most for the car if you do it this way, but requires more effort. Some find it a pain to clean the car, and find places to advertise, not to mention the hassle of dealing with other’s schedules. It can be very tedious and time consuming.

Be sure to contact the title holder to find out the “payoff amount”. This is the amount they are willing to accept to transfer the title to you. Unfortunately, this is non negotiable, and usually well over market value, so you will most likely take a financial hit.

If you find a willing buyer, you are able to arrange the sale before you actually send money to the bank. The bank is usually willing to send the title to you or the person buying the car. However, this can be tricky, because, unless you get temporary tags from a dealer (at a fee), the registration will still be in your name until the new title arrives. The title can take up to a week to arrive.

The last option, and the option that makes the least sense financially, is to take it to a dealer and buy a car on the lot. Please be super careful. They are trained professionals at taking people like this to the bank. They will contact the title holder and find out your payoff amount. They will take the difference between that amount and what they can sell the car for at wholesale and tack it onto the purchase of your next already overpriced car. They are artists at mixing up the numbers so you are confused as heck, and ware you down until you say yes.