Repossession:
The leasing company has the right to repossess the vehicle if you miss payments or violate the terms of the lease agreement. They can take the car back without notice from any location, including your home, workplace, or public parking.
Fees and Charges:
Besides the repossession, you'll likely face hefty fees and charges, such as:
- Late fees
- Repossession fees
- Storage expenses
- Title and registration fees
- Transportation costs
Credit Damage:
Defaulting on a car lease can severely damage your credit score. Late payments, repossession, and outstanding debts can all negatively impact your credit, making it harder to secure loans or other forms of credit in the future.
Deficiency Balance:
If the leasing company sells the repossessed vehicle for a price less than the outstanding debt, you may be responsible for the difference known as the deficiency balance. This amount can be pursued through legal means, and you could be taken to court for payment.
Lawsuits:
Failing to return the leased car or fulfill your obligations under the lease contract can lead to legal action. The leasing company may file a lawsuit against you to recover the vehicle, outstanding payments, and any other associated costs.
Future Leasing or Financing Restrictions:
Defaulting on a car lease can make it challenging to lease or finance a car in the future. Lenders and leasing companies may be less likely to work with you due to your negative history.
Personal Impact:
Beyond financial consequences, defaulting on a car lease can cause considerable stress, anxiety, and potential embarrassment when the vehicle is repossessed in public.
If you're facing financial difficulties and unable to make your lease payments, it's crucial to communicate promptly with the leasing company. They might be open to working out a solution like payment deferral or modifying the lease terms to prevent repossession and the subsequent consequences.
