Over the last few years, leasing a car has surely become one of the most popular alternatives to buying one. While the process allows you to circumvent paying the full price at the dealership, it also means you will probably have to settle for monthly payments, and in many cases, it may weigh heavy on your pocket.
Additionally, your deal may also include additional costs, such as end-of-lease fees, maintenance fees, mileage and upfront costs, and much more. Hence, if it comes to a point where affordability becomes a hassle or saving money becomes impossible, you can refinance your car lease for lower monthly payments.
How Is It Different From Refinancing a Car Loan?
Some people often use the terms interchangeably. However, there are clear-cut differences between refinancing a loan and refinancing a lease. For one, the latter means taking a loan out for the car’s value and making payments on a monthly basis on that auto loan.
Is It Possible to Lower Your Monthly Payments On a Leased Car?
If financial hardships are taking a toll on you and making it hard for you to pay on time, then it may be time to do something to resolve the problem. Signing a lease means that there is no way to change the payments since they have been specified between the leasing company and you.
Renegotiation is not an option, unlike auto refinance that allows you to change the status of your monthly payments. The only way to lower your monthly payments is by finding a way out of your existing lease contract. This is possible if you consider refinancing your lease.
How Does It Work?
Refinancing entails you becoming the owner of the vehicle. The process is relatively simple. All you need to figure out is the car’s payoff amount so you can get a loan for that amount and purchase the car.
However, it means that you can refinance your lease at any point in time, assuming that you’re able to get a loan out for the car’s value. Planning to refinance early in your contract could mean that you’re on the hook for most of your payments.
There’s a high chance that they may be added to your lease buyout amount. Hence, you’ll end up making payments on the loan instead of paying lease payments. This way, you won’t be subject to the lease terms or any other fees associated with it.
In the end, lowering your monthly payments through lease refinancing depends on certain factors such as your loan term, interest rate, and credit score. Hence, you may want to work on improving what you can before you consider refinancing a lease.