If you can't make your car lease payment, the most immediate consequence is that you are in default of your contract. This triggers a series of events, starting with late fees and damage to your credit score, and can escalate to the vehicle being repossessed. You may also be held liable for the remaining lease payments plus significant early termination fees.
Your best course of action is to communicate proactively with your leasing company before you miss a payment. Many lessors have temporary hardship programs, payment deferrals, or lease extension options that can provide short-term relief. Ignoring the problem will only make the situation worse.
If no arrangement can be made, the leasing company will eventually repossess the car. Repossession can happen quickly and without warning once the account is seriously delinquent. After repossession, the car is sold at auction. The critical financial risk you face is the deficiency balance. This is the difference between the auction sale price and the total amount you still owe on the lease, which includes the remaining payments, the vehicle's predetermined residual value, and all associated fees. You are legally responsible for paying this often-substantial deficiency balance.
A voluntary surrender, where you arrange to return the car to the lessor, is generally better than a forced repossession. While you are still liable for the deficiency balance, it may slightly reduce some fees and demonstrates a willingness to cooperate. Here is a comparison of potential outcomes:
| Action/Outcome | Impact on Credit Score | Potential Fees Incurred | Risk of Lawsuit for Deficiency Balance | Long-term Financial Impact |
|---|
| On-Time Payment | Positive (No negative marks) | None | None | Minimal |
| Late Payment (30-60 days) | Negative (Drop of 50-100 points) | Late Fees ($25-$50) | Low | Short-term damage, recoverable |
| Voluntary Surrender | Severe Negative (Drop of 100+ points) | Early Termination, Disposal, Late Fees | High | Significant, long-lasting debt |
| Involuntary Repossession | Severe Negative (Drop of 150+ points) | Repossession, Early Termination, Late Fees | Very High | Severe, long-lasting debt and legal risk |
Exploring a lease assumption (or "lease transfer") through a service like Swapalease or LeaseTrader can be a strategic way to get out of the lease without the severe credit impact of a default, provided you find a qualified individual to take over the payments.
