What Happens if a Person Who Has No Spouse Dies Before the Term of Their Car Lease Expires?

Among the myriad of things you might not want to think about following the death of a friend or loved one is what happens to their possessions. Some decisions may be easy, like what to do with their clothing. Others aren't so simple. Less common questions arise, such as what happens to a leased car after the lessee dies, particularly if the lessee is unmarried.

Terms of the Lease

Auto leases lay out the terms of what happens if the lessee breaks the lease prior to the end of the contract. There is nothing in the standard lease that visits the topic of what happens if the lessee dies prior to fulfilling the contract. While it may come as a surprise to grieving friends and family, death does not alter the terms of a lease agreement in any way. If payments are missed, the leasing company is within its rights to repossess the car. If the car is simply turned back into the leasing company, the company will ask for a lump sum of the payments that were not made. For example, if the monthly lease payments were $300 and the lessee died with 12 remaining payments to make, the lease company will ask for $3,600, plus lease-break and turn-in fees.

Auction

When a car is returned to the dealership before the expiration of the lease, it will frequently be sold at auction and the company will apply whatever money it makes toward the balance due. If it doesn't make enough to cover the entire amount, it will look to the decedent's estate to make up the balance.

Estate

The lease company will get in line with other creditors, asking that any money in the lessee's estate be used to pay off the debt. An estate includes any cash, stocks, bonds, life insurance and property the decedent owned. If there is not enough money in the estate to satisfy the debt, the lease company must absorb the loss.

Transfer the Lease

One way to avoid early termination fees is to find someone who is credit-worthy and willing to take over the remainder of the lease. The leasing company can help you take the necessary steps to transfer the lease to a new holder.