Can you pay off a lease in full and save money on interest or does it have to be paid every month?

 

Err... I suppose you can... depending on your lease agreement. There might be penalties for pre-payment and what-not, so you have to look that up.

It defeats the whole purpose of a lease though... most people do it to keep the payments low (and possibly put the money elsewhere) or because they don't really want to OWN the car, just "rent" it for a couple of years. I don't think anybody really chooses to go all the way though, instead when the term is coming up they'll jump right into another lease... makes sense, because nobody really wants to put a huge balloon on what's basically a 'used' 2-3 year-old car.

If you're talking financing then it's another story, and I think most people *plan* to be out of it before they're upside down on the car.

 

check your contract. It usually states if there are any pre-payment penalties. I don't think most leasing co's would be too happy as that's how they make their profits on inflated lease factor rates.
Best of luck. Let me know what happens
Jay

 

Yes, I just paid off the lease on my 03 E500. No Penalties. I think as long as you wait 6 months to a year, there are no pre-pays. Atleast with MBCC, depends on who you lease through.
Just call them or log intio your account online and they'll give you a pay-off quote.
Keep in mind you have to pay all sales tax upfront, so that usually ads some $$ to price, instead of spreading it evenly over monthly lease payments.

 

There is a major problem with paying the lease off. If you do and the car is totalled, you don't get a refund, and you don't get another car.

This is also why it is recommended that you never put money down on a lease.

 

My boss paid off her lease on a 2004 SL55... for tax purposes.

 

I've paid off quite a few MB Credit Copr leases in order to buy another car. Normally I was "upside-down" especially if I did it during the first year, but it can and is done. BTW MB Credit has a $2400 fee built in to there leases for early termination, it was only $395 on my BMW through BMW Credit.

 

MB credit screws you big time. They have overinflated residuals, which make your payment cheaper, but then they have huge money factors which bring the payment right back up. so at the end of they day, your payoff is a lot higher, and your payment is the same as someone with a low residual and a low money factor. i leased my m3 thru Chase, payed off (sold) in 8 mos, no fees, no nothing. fair residual, fair moneyfactor.. if you're in the habit of paying off cars and getting new ones, go thru chase

 

Does anybody decide to buy their car outright after their lease is up?

 

Generally speaking, you will have spent MORE on the car you bought after having leased it, than if you negotiated & arranged the deal as a purchase right from the beginning.

 

If you were going to be purchasing the car, or if you were going to get another car, the payoff of a lease is generally possible. Particularly if you are going to be getting another car, as the dealer will be MORE than happy to roll the money that they have to pay in to your monthly lease payment.

But as mentioned, I think the MOST important thing to remember about paying off the lease early, that if it is stolen or totalled, you will lose all of your money. Same reason to only do minimal capitalized cost reductions when writing a new lease deal. So many ads for more expensive cars come out with a super low monthly payment to get people in to the showrooms, but when you read the fine print and see that thousands of money down is required, I'll pass.