Question: Am I liable for any money for turning my leased vehicle in two years early?

October 06, 2005

Hi Tony

I wonder if you can help me out. I returned an SUV after 2 years of a 4 year lease. I simply didn't want the truck anymore. I was leasing at $450 per month, totalling $10,800 remaining on the vehicle which they wanted.

The dealer was asking for $12,000 for breach of contract. The dealer did turn around and sell the vehicle for $17,800 and not have any losses.

The leasing company is threatening to sue me for an outstanding $2,500. Does this sound fishy to you, or am I accountable for the $2,500?

Sincere thanks,

Tony A.

Answer:

Hi Tony,

If you turn a leased vehicle in early you are liable for the remaining payments and usually an early termination fee which varies from lease company to lease company.

You are also in breach of a lease contract, and your credit will be adversely affected due to you turning the car in. It's along the same lines as giving a car you have financed back to a bank. Even though you do it voluntarily it's the same as a repossession.

Since the lease company owns the car, once it is returned to them they can sell it for whatever they want and it should have no bearing on what you owe. Keep in mind that the lease payments only represent a portion of the vehicle's value. The residual value which is determined at the beginning of the lease and the total of lease payments equals the approximate value of the car.

As far as the $2,500 they say you still owe you should probably ask them how they came up with this amount. I have no idea, but I have a feeling you're not going to get out of it, and quite frankly you'll be lucky if that's all you end up owing.

All my very best...

Tony Iorio