Date Published: June 24, 2026 | 3 minute read | FAQ Article by Adam Pruden at Redwater Dodge

How do I know if I have equity in my existing lease?

Determining whether you hold positive equity in your current vehicle is the critical first step before making any decisions about early termination. Fortunately, discovering your equity position is a straightforward, transparent process at our dealership.

To determine where you stand, our team will perform a comprehensive, no-obligation physical and market appraisal on your vehicle. We take that current market value and compare it directly against two specific figures: your remaining lease obligations and your contract's pre-determined residual value.

Because the pre-owned vehicle market fluctuates, there are frequent instances where your vehicle may actually be worth more on the open market than the financial institution projected at the start of your term. If our appraisal reveals that your vehicle’s market value exceeds your outstanding liabilities and residual value, you possess positive lease equity. This equity can be a massive advantage, allowing you to seamlessly pivot into a new vehicle or offset any transitional costs.

What kind of penalties will I face if I break my lease early?

It is a common misconception that breaking an automotive lease early will automatically result in catastrophic financial penalties. Understanding the reality of contract structures will help you make a much more informed decision.

Most automotive manufacturers do include a minor early termination fee within their lease agreements. However, the primary financial factor to consider is that you remain contractually liable for the remaining monthly payments left on that lease. For example, if you have six months of payments remaining, the leasing company expects those funds to be accounted for.

This is exactly why a professional appraisal at Redwater Dodge is so vital. By accurately analysing your vehicle's current market worth, we can often find that your positive equity balances out or completely covers those remaining payments. Our goal is to determine if the numbers align so that breaking your lease makes genuine financial sense at this exact moment in time.

Does it make sense to break my lease right now?

From a purely practical standpoint, it always makes sense to explore breaking a lease if your current vehicle no longer meets your day-to-day lifestyle or business needs.

Paying every single month for a car, truck, or SUV that is no longer doing what you need it to do is an unnecessary drain on your hard-earned money. Whether your family is expanding, your daily commute has changed significantly, or you suddenly require the heavy-duty towing capacity of a Ram truck, driving the wrong vehicle costs you utility.

If your vehicle has ceased to fit your lifestyle, we encourage you to visit us to explore the financial consequences or advantages available to you. Every driver's scenario is unique, and you might be surprised to find how favourable the market conditions are for an upgrade.

Additional Frequently Asked Questions About Leasing

Q1. What happens if my vehicle has negative equity when I break the lease?

A1. If your vehicle's appraised market value is lower than the total of your remaining payments and residual value, you are in a negative equity position. In many cases, Redwater Dodge can roll that remaining balance into a new finance or lease agreement on a different vehicle, consolidating your payments into one manageable monthly sum.

Q2. Are there kilometre restrictions when terminating a lease early?

A2. Yes, your original lease agreement dictates a specific kilometre allowance. When you break your lease early, your mileage will be assessed relative to how far into the lease term you currently are. If you have significantly exceeded your pro-rated kilometres, it may negatively impact your vehicle's appraisal value and equity position.

Q3. Can I trade my leased vehicle in for a completely different brand?

A3. Absolutely. You do not have to stick to the same manufacturer when breaking a lease early. Redwater Dodge can accept your leased vehicle as a trade-in, settle the outstanding balance with the original leasing company, and help you transition into any new or pre-owned vehicle on our lot.