About a year ago I leased a Subaru BRZ; I thought it would be awesome. Now I'm annoyed by the lack of power and could really use something with more space. How would I go about getting out of the lease? Should I suck it up and pay the penalty, or stick it out and wait until the lease is over?

This is what my partner Tavarish warned about when he cautioned people about leasing. But that doesn't help your situation. The first thing you need to do is find out your pay-off amount from your leasing company. This is different from the purchase option/residual that was established when the lease started. That figure is what the car is worth at the end of your term. You need to know what the purchase option is today. Often this is a combination of the residual value, the remaining payments, and any early termination fees.

For the sake of our calculations, let's assume you are making payments of $349/mo for a 36 month term on a BRZ that carried an MSRP of $26,490. Suppose your residual value at the end of that lease is about $12,500. One way or the other the leasing company wants all of those payments. If you are only a year into the lease you have 24 months left of $349 per month, for a total of $8,376; add that to the $12,500 residual for a total of $20,876. Assuming there are no additional penalties for early termination, that is the payment you need to make to get out of the lease immediately. Now here is the problem...a one year old BRZ Premium with 12,000 miles is worth about $18,500 on a trade. That means you are working with a deficit of $2,300.

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Because you owe more than what your car is worth, this situation is very similar to being upside-down on a loan. You either have to come up with enough cash to make up for the difference or roll that overage into the next loan or lease. If you were to lease something else for 36 months you can count on your payment being about $65-70/mo higher (depending on interest rate) than it would have been otherwise. This means you either have to get a cheaper car to offset that extra cost, or pay more per month than your current situation. Of course, if you were to purchase another car instead of leasing, that $2,300 could be distributed over a longer term, say 60 months for an increase of only $40/mo (depending on interest rate).

What this all comes down to is picking the right car ahead of time. With leasing you are essentially "stuck" with that vehicle for the lease term. You can get out, but too often the extra costs discourage it.

Depending on your immediate needs and budget, it might be worth taking the hit to get a different car. For example, if you have a family that is about to increase in size and you just got a pay raise, spending more for something practical could be a good option. But it is probably best to stick it out and tolerate your car until your lease is up.

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If you have a question, a tip, or something you would like to to share about car-buying, drop me a line at AutomatchConsulting@gmail.com and be sure to include your Kinja handle.