Early Termination Fee

An early termination fee is a charge applied when lessees end their lease agreements before the scheduled maturity date. Leasing contracts are structured around fixed monthly payments and a residual value, so early termination disrupts the financial assumptions made by the lessor.

For consumers, early termination fees can be substantial, often requiring payment of the remaining balance, penalties, or both. For lessors, these fees ensure recovery of expected financial returns.

For dealerships, early termination can complicate customer satisfaction but also creates opportunities for new lease or purchase contracts. Consumers considering early termination should explore alternatives such as lease transfers, buyouts, or negotiating with the lessor.

Ultimately, early termination fees highlight the rigid nature of leasing contracts and the financial consequences of breaking them prematurely.