I called Infiniti Financial today asking about early lease termination law and the guy told me in California there is a special law for this. He told me I have to do a lease return inspection and go to an Infiniti or Nissan dealer. They will put the car on their inventory to sell and if they manage to sell the car for the payout payment, I am good. For what ever price they sell the car, I have to pay for the difference. Is that true? Anyone has any experience with this?
thanks
Very interesting to see if this is true. Seems like a hassle for the dealer b/c you’re essentially parking your car there with a for sale sign. Not sure what would be in it for them, if anyone has clarification, that would be great and very interesting to learn about.
I’ve seen a lot of CA lease clauses that involve this if you’re more than 90 days out of lease termination.
https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV§ionNum=2987.
Interesting, never as aware of this
They will wholesale it at auction, potentially leaving you on the hook for a large difference
I think this gives one some negotiation power when you trade in your car to get a new car from the dealership. The only drawback here is that you will be stuck with the same manufacturer. As much as I love Infiniti, I dont want another Infiniti. I am just afraid, they wouldn’t care at all and either give it to auction or just price it as low as possible to get rid of it.
Then move on to another brand.
The chances that you have any positive equity in your Infiniti is close to 0.
You have just described the contractual principle of “duty to mitigate.” I don’t know about the California law but i’d guess Infiniti just need to treat your lease turn in the same as every other lease turn in and they have followed the law. This probably just means shipping car to an auction.
This has nothing to do with the dealer. IFS owns the car and sells it at auction. If you think your Infiniti will sell for anywhere close to payoff amount, think again. Better be prepared for a huge bill if you go through with this.
and what if they sell it to an employee for a few hundred dollars?
How can a dealer sell it to an employee for a few hundred if they don’t own it? As I said, IFS will auction the vehicle.
exactly. referring to the original post
Aren’t the auctions closed in California for Corona holiday.
I see big fees to you and low auction prices. Didn’t the Manheim auction prices drop over 10 percent this month (unprecedented).
What you are proposing to do is usually a losing proposition. Right now, because of Corona, I see it as being spectacularly ill advised. You just might be out big big money.
and that’s on average. Imagine what they’ve done on infinitis!
here’s a fun article to read about used car prices…
The Manheim Used Vehicle Value Index—a key benchmark for industry pricing—has declined about 11% compared with March and is down roughly 10% year over year. The last time the Index dropped a similar magnitude was, unsurprisingly, during the 2008-09 financial crisis.
Reviving this old thread.
I just ran into the same problem with Nissan. This took me by surprise, because I was able to early return a Toyota one-pay lease back in 2021 without issue as well as a Honda lease in 2023 (although the Honda was a hydrogen powered vehicle with special circumstances surrounding the early return).
Is my understanding correct that in California if we were to return a vehicle early it’s not simply a matter of paying the remaining lease payments + processing fees, but rather we’re on the hook for residual value in the lease minus the realized value at an auction?
If that is the case I’d likely be responsible for at least two to three times the amount of my remaining lease payments. Even when factoring in insurance and registration I’d be better off parking the vehicle for the next 15 months rather than paying the difference between the auction price and the residual.
Thank you in advance to anyone who can help or provide insight.
99% sure you owe the lesser of the two (remaining payments vs negative equity).
Try to sell it directly to a dealer if the bank allows that (most do) if that’s beneficial vs the early termination.
The thing is that post #4 has a link to CA law that does support what CRV has said (section b5; apparently the only “true” exception is if you buyout the vehicle).
I was completely unaware of this…
What does your lease contract say regarding early termination?
Thank you all for your input. I called Nissan Financial and spoke with a different representative today. I very clearly explained the situation using the same terms as I had used on Friday. Initially the response I received from today’s representative was the same - the car has to be auctioned off since I live in California. This is also the same response the Mike2000 posted about in the original post.
Nissan’s default answer seems to be that the car will have to be auctioned. If I had to guess they have a script they read, since today’s representative gave me the same answer (almost verbatim) as last week’s representative. The representatives were especially particular about informing me that this was the case “because I live in California.”
Just like last week, I pressed the issue and asked why I would need to go through the auction process if I am willing to pay the remainder of my payments plus the disposition fees. If I were to do that, what difference would it make if I kept the car for the remaining months or turned it in early?
It was then as if something finally clicked with this representative, and he said of course I can do that. I can schedule a lease return inspection with their third party inspection company, pay the remaining rent, and schedule to return the vehicle to a Nissan dealership.
Hopefully this post helps someone else who is looking to turn in their lease early.
To summarize : it is now my understanding that if you would like to turn in a lease early in California, you have the option to have the car auctioned off and pay the difference (in any) between the realized price at auction and the lease residual value, or you can pay the remainder of your lease payments plus disposition fee and any excess wear and tear charges.