You may turn in your auto lease by terminating your contract early, but you'll have to pay a bank termination fee in addition to any payments due until the end of your contract. If you intend to return your lease because you can't make payments, the instance is known as repossession.
Early Termination
Call your bank to determine its procedure for an early lease termination. You can cancel your contract, but doing so might be expensive. Expect to pay all payments you have left in your contract and a termination fee, which differs by bank. You might have to pay termination costs before returning your car. Once your vehicle is returned, a bank representative will inspect it. If you went over your allowable mileage or exceeded wear-and-tear limits, expect to pay additional fees.
Repossession
If you can no longer make your lease payments, contact your bank immediately. Don't wait until it starts the repossession process, which significantly damages your credit. Your bank may have programs in place to help you. If there is nothing more you can do, make arrangements to return your lease to the bank, known as a voluntary repossession. Otherwise, the bank may seize the vehicle from wherever it can find it, including your home or place of employment.
Effects on Credit
If you pay all applicable fees to terminate your lease, your credit will remain in good standing. Repossession, on the other hand, significantly reduces your credit score. Your lease will be reported as repossessed to the credit bureaus and remain on your credit history for at least seven years. Once your vehicle is returned by repossession, the bank will resell it. You must pay the bank for the remaining balance of the car's total cost, not just the lease amount. If you don't, the bank will pursue legal action and eventually garnish your wages.
Considerations
Paying to terminate your lease or returning it by means of repossession are not your only options. Consider transferring your lease to another person, known as a lease assumption. Transfer costs are far less than the cost of termination. Check the Swapalease website or LeaseTrader.com to learn more. If you've lost your job or are experiencing other forms of recognized financial hardship, tell your bank. It may be able to extend your lease, allowing you to miss several payments.
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