Defaulting on a Car Lease: 2 Consequences

There are a few things that can happen when you default on a car lease, we will list at least 2 of the most common consequences. You will lose the car because of the loan default and your credit score will be lowered, which will affect your ability to borrow money in the future.

You Will Lose the Car

If you are no longer able to pay the car loan, the car will be repossessed.  Typically a lender will repossess a car if they have not received payment for at least 30 days. The repossession timeframe will vary between lenders and market conditions. You will have a small window to be able to pay the balance owing and most lenders will work with you if they receive any type of payment. However, if you are unable to pay the payments as stipulated in the contract, you will lose it. 

Additionally, the lender will sell the car and if they do not collect the balance you owed, they will assess a judgment against you for the difference. In this way, you will not have a car, and still owe the lender a portion of the balance.

Your Credit Will be Affected

Having repossession on your credit report will result in a lower credit score. A low credit score will make it difficult to borrow money in the future. It will also add costs to a loan because lenders charge higher interest rates on loans made to people with low credit scores.

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