As the price of new cars has increased in recent years, leasing a car has become more popular. In this current crisis, what are your options if you have a leased vehicle and are struggling to make payments? If this is you, you aren’t alone. As unemployment numbers have skyrocketed in the last few weeks, it’s more and more likely that car payments are falling behind.
The good news is most car manufacturers and lease finance companies are offering some kind of relief to persons affected by COVID-19, either directly or indirectly.
For example, if your lease is expiring soon, most are very willingly (and sometimes automatically) extending the lease term, usually up to 6 months. This could be helpful if you have suffered a loss in income and absolutely must keep a vehicle. Entering into a new agreement, which may require sizable upfront fees and payments, could be difficult for you at this time. A temporary extension of the current lease may offer you breathing room while you plan your next move, whether that is getting a different vehicle or setting yourself up to go car-less for a while. (Be sure to ask if annual mileage limitations will be increased.) An extension of the lease is also helpful if you or a family member is ill, and you simply cannot return the car immediately.
You can also request a deferral of your lease payments. Manufacturers are deciding this on a case by case basis. It definitely makes sense to ask, but know that there are no guarantees; it appears that companies may take into consideration the credit score of the requestor. Some companies are offering an initial deferral of payment on very recently established leases when the leaseholder has been impacted by COVID-19. Finally, if you are unable to make your lease payment and there is no payment deferral offered, some companies are waiving late fees, at least for a time.
Unfortunately, if the “right” choice for you is to simply end the lease early, there is usually no inexpensive way to do this. All of the available options — transferring the lease, exercising your right to early termination, buying out the lease — have significant upfront costs that you may not be able to afford at this time. Simply returning the keys and walking away will wreck your credit, limiting your options in the future. The realistic, second-best strategy may be to continue with the lease, taking advantage of any payment flexibility that you can find along the way.
Bottom line: Call your lease provider as soon as possible to determine all the options they are currently offering you.
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