If your financial circumstances change, whether this is due to redundancy or something else, you may suddenly find that you can’t keep up with the monthly rentals on your lease car. This can be a distressing situation to find yourself in. Will it mean you lose your car? How will your credit rating be affected?
It’s easy to panic when faced with these difficult circumstances, but the important thing is to make sure you know your options and you take appropriate action in a timely fashion. You may wish to speak to an accountant for advice, or you can get free confidential information and guidance from a debt advice charity or organisation. These experts will help you to find the best possible resolution.
To give you a clearer picture of some of the actions that may be open to you, here are answers to commonly asked questions on this topic - as well as advice on how to reduce the risk of getting into difficulties making your rentals.
Simply stopping your rentals may seem like a tempting option. However, this is not a good idea. It will have a negative impact on your credit rating and, crucially, it can mean you end up owing more money due to late rentals and added charges. If your finance provider ends up repossessing your car, you will also incur extra charges for this. Even if your lender sells the car and puts the funds received against your debt, you will still owe the difference.
Some people mistakenly assume that they can just hand their car back and stop making their rentals if they run into financial problems. In fact, this isn’t the case. When you’re in a leasing agreement, returning the car doesn’t necessarily mean you can walk away without penalty. Depending on the agreement you have, you may be required to pay off the leasing costs in full if you return the vehicle before the end of your agreement. Most leases include an early termination clause, but there can be significant charges for doing this. So, you’ll need to think carefully before you go ahead and cancel your agreement.
If you want to avoid the problems associated with simply stopping your payments and exiting your agreement early isn’t an option, you might find yourself asking things like ‘can car lease prices be negotiated?’ and ‘can a car lease be transferred?’.
The answers to these questions will depend on your particular circumstances and the details of the agreement you have in place with your finance provider. In certain instances, options like this may be available, but you should never assume that you will be able to take these steps. You can contact your finance provider to discover if there is any flexibility in these areas.
The fact is, whether it’s losing your job, becoming ill or something else beyond your control, certain events can put unexpected pressure on your finances that make it hard for you to continue making your rentals. This means you may never be able to fully guard against the risk of being unable to afford ongoing car rentals.
However, there are steps you can take to reduce the likelihood of this happening. For example, when you’re choosing your leasing agreement in the first place, think very carefully about your budget. Rather than opting for a car that stretches your finances, you may benefit from going for a cheaper one that you can more comfortably afford. Keep your eyes peeled for special offers that could help you to save money too.
More generally, it’s advisable to build up a cushion of savings if possible that you can draw on in emergencies. According to the Money Advice Service, a good rule of thumb is to have three months’ worth of essential outgoings in a savings account. As well as being extremely useful if you need to dip into them, having these savings in place can give you added peace of mind.
If you do fall into difficulties keeping up with your monthly vehicle rentals, it’s good to know the options that are open to you, but it’s also important to seek expert advice so that you take the most appropriate steps.