Leasing is convenient for many people. But if you have trouble making your payments, your leased car might get repossessed. As with repossession of an owned car, car lease repossession is an expensive and financially damaging process. But there are actions you can take to prevent it from being repossessed — or at least ease some of the consequences.

Steps to take before repossession

If you’re missing payments on your car leases, your vehicle might get repossessed. But you may still be able to delay or prevent repossession.

  • Read the terms of your contract. Your lease contract will outline whether and when your car can be repossessed. It also outlines the costs and what you will owe after the repossession. Understanding what conditions need to be met and how you can avoid them before your car is repossessed can help you come up with a plan for moving forward.
  • Come up with a plan. Think about whether you want to keep the car and if you can afford it. You might be better off trying to get out of the lease and replacing it with a less expensive one.
  • Remove all personal items from your car. Your car can be repossessed at any time. Take anything that you want to keep out of the car — recovering personal items if your car is towed away can be a pain.
  • Consider voluntary repossession. If you know your leased car is about to be repossessed, you can agree to hand it over voluntarily. This can limit fees that you will pay and might reduce the damage to your credit.

Ways to prevent a leased car repossession

If the car you are leasing is about to be repossessed, there are some steps you can take to try to keep the vehicle.

Make the missed payments

Many lease contracts let you “cure” your lease if you make missed payments and pay accrued fees. For example, if you’re paying $250 a month and missed the last two monthly payments, you could send $750 — plus late fees — to the leasing company to cover your monthly payment and make up for the previous two to put you back in good standing.

In some states, you may be able to “redeem” a leased vehicle after repossession. Your lender should send you a notice outlining the steps you need to take and how much you will have to pay to redeem your vehicle before it is sold at auction.

Contact the leasing company

If you reach out to your leasing company, it might be willing to work with you to help you keep the car. This could include letting you defer payments or adjusting the terms of your contract to make the lease more affordable.

A leasing company is not required to make any adjustments to your contract. Their willingness to help will depend on which company you have leased through, your previous payment history and whether you have notified them of financial difficulty.

Voluntary repossession

If you give up your car voluntarily, the leasing company will likely charge fewer fees than it would if it had to send someone to tow it. While you will still lose the car, voluntary repossession may save you money and help you recover more quickly. Not every lender will repossess your car, however. If the lender refuses, keep making payments and contacting the lender until it acts on the repossession.

How much a leased car repossession costs

Once your leased car gets repossessed, you aren’t free and clear from your debts. You will still owe money to the leasing company, and there will likely be significant fees added to payments you already owed.

You can expect to pay:

  • The costs of preparing the car for sale.
  • The remaining balance of your lease, often reduced by the amount the company sells your car for.
  • Any past due amount.
  • Charges for excess mileage and wear and tear.
  • Disposition fees, unpaid interest and other lease-end costs.
  • Any costs incurred during the repossession, like towing and storage before auction.

Your credit will take a hit when your car is repoed. Unfortunately, there isn’t much you can do about that — you will have to wait until the default is off your credit report. In the meantime, it will be harder to qualify for new loans. And expect higher interest rates on the loans you are approved for.

If you fail to pay the leasing company for the repossession, you may be taken to court. If the court orders you to pay, you may be responsible for court costs and attorney fees in addition to the amount you already owed.

My car was repossessed. What are my rights?

Your rights depend on your state laws. As long as the repossession is not violent, forced or taken from a closed garage, it can occur at any time without notice.

Review your state laws before and after your car is repossessed. Once the vehicle is repossessed, your state may require the leasing company to provide the time and date of the auction. You may also be able to have your vehicle returned once the past-due amount and fees are repaid.

Although you should remove your personal property from the vehicle before it is repossessed, the leasing company or a third-party company hired to repo your car must return any property within the vehicle. And if your vehicle is sold for more than the amount you owe, you may be entitled to any surplus amount.

The bottom line

Dealing with a leased car repossession can be stressful. If you don’t prepare, you will face hefty fees and might have trouble affording a replacement vehicle. Contact your lender to see if there is any way to modify your lease agreement. And if that fails, try to get ready for repossession to minimize the negative impact on your credit and finances.