Can You Break Your Car Lease for Medical Reasons?

Whether you can break a car lease early due to medical reasons varies. Medical issues or disabilities are not immediate or automatic causes for lease termination. Instead, both parties must agree to terminate the lease and work within what state laws permit. Some lease agreements include clauses that address medical issues, while state laws can also assist in terminating a lease amicably. 

Breaking a car lease for medical reasons can put you in a similar situation if you can’t afford your car lease payments anymore. If medical debt continues to plague your finances, paying for a car lease can be out of the question. That’s not to mention any physical or psychological challenges you may face due to your health concerns that could make driving difficult or impossible. 

When you break a car lease for any reason, you can potentially negatively impact your credit score. Voluntary repossession and defaulting on your lease can cost your credit score 100 points or more and strike a mark against your credit report that lasts up to seven years. However, you can control much of that damage with a simple phone call and conversation with the leasing company. 

Even the best car leasing deals can turn sour if you have to figure out if you can end a car lease early due to your medical issues. Before you make any phone calls, do your research to see what immediate assistance you may qualify for: 

1. Review your lease agreement. Look for sections that discuss medical issues regarding breaking the lease. Some lease agreements allow you to re-assign, refinance, or cancel a lease due to a serious health condition. If your health condition affects your ability to work, you may have a stronger case. 
2. If your lease agreement doesn’t include medical issues, turn to your state laws next. Locating the information you need can be trickier than looking through a relatively short lease term agreement, but it’s well worth the cost when you consider hefty early termination fees. 
3. Sometimes, a search through your lease agreement and state laws turns up empty. In that case, it’s best to contact an attorney to learn more about your rights. In any case, it’s best to have a sounding board for discussing your options and how you can approach the leasing company to improve your chances of successfully terminating the lease without damaging your credit.

Pursuing lease termination through the approach of your medical issues may not bear fruit. Indeed, requesting and paying for a Declaratory Judgment from the court that describes your inability to continue the lease due to medical issues can easily cost you more than the early termination fees assessed. Instead, consider the alternatives available to anyone looking to end a car lease contract early, whether or not they have serious medical issues.   

Touch base with your leasing company 

Approaching your leasing company with health information can feel intimidating. However, explaining your situation to a representative can open you up to several resources. As much as leasing companies are in the business of making money, like any company, circumstances change, and the best companies respond in kind. 

If you’ve already looked through your lease but don’t see anything regarding early termination due to medical reasons, ask a representative to review your lease again. This request opens the door to additional options you may have access to, even if your lease agreement doesn’t include this language. Specific internal leasing policies don’t always make it into your typical lease agreement. 

Be ready with a pen and paper to write down any requirements, deadlines, and restrictions that may come with terminating your lease due to your health concerns. Your leasing company will likely request documentation from a health provider outlining your condition. Recommendations regarding your ability to work can be valuable to leasing companies in demonstrating financial hardship due to a health condition.   

Follow through with early termination 

Should you decide against speaking to your leasing company, you do have the option of notifying them of early termination and ponying up the early termination fee. This move is open to any lessee, regardless of personal health. Some lessees choose this option to cut to the chase and deal with their leased car swiftly before focusing on other pressing matters concerning medical issues.

Early termination specifics vary between dealerships, but this move often includes paying a fee to break the lease. Leasing companies usually require the difference between the remaining payments and the residual value. For example, if you still owe $10,000 on the lease and the residual value of the vehicle is $7,500, your early termination fee would be $2,500. 

Buy out your lease and sell the car

Savvy lessees may take this chance to buy out their lease (if permitted) and sell the car for profit. Individual circumstances may vary, but if your lease agreement includes an early buyout option, it may be advantageous to use the money for an early termination fee toward buying the car instead. This allocation of funds leaves you with an asset you can sell for a potential profit.  

Transfer your lease payments to another car

Medical concerns can temporarily hamper your ability to drive a car. While you may need to break your lease now, you might need a car soon once you recover. In this case, transferring your monthly lease payments to another car can help you trade an expensive lease payment for a more affordable one. 

If you’ve just begun your lease, transferring your agreement to a more affordable car can still leave you accountable for hefty monthly payments. However, this option does help you retain access to a vehicle. The benefits of this option, like most, depend on your circumstances and needs.  

Consider lease assumption 

If you’re searching how to sell your lease, you may come across a lease assumption. If you no longer want or can afford your lease, you can collaborate with someone who assumes your lease payments. Online sites such as LeaseTrader and SwapALease.com facilitate these transactions. Note, however, that some lease agreements keep you on the hook for payments should the new lessee default, so read the fine print carefully. 

Voluntarily repossess your lease

Short of defaulting on your lease agreement entirely, voluntarily repossessing your car can help you make the most of a difficult situation, but only as a last resort. Repossession sticks with your credit for up to seven years and can reduce your credit score by up to 100 points. However, voluntary repossession looks better to future lenders than defaulting on your lease altogether. 

When you voluntarily repossess your lease, you turn it in to the leasing company with the understanding that you cannot make payments any longer. The leasing company will then sell the car at auction and use the proceeds to pay off your remaining balance. Any difference between the auction price and your debt is still your responsibility. 

It can be tough to juggle medical issues and doctor appointments while figuring out what to do with your leased car. However, staying proactive about your financial obligations can help you avoid voluntary repossession and credit damage. Deal with the issue quickly and efficiently to set yourself up for future success.