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Problems Returning Leased Cars During Stay at Home Orders

| Apr 19, 2020 | Motor Vehicle News |

Most car dealership sales departments are currently closed, which is creating difficulties with leased vehicle returns because end of lease turn ins are normally handled by dealership sales staff.  Dealerships and finance companies have little interest in resolving this problem because there is a glut of unsold used cars.  Dealerships would much rather stick the consumer with a vehicle coming off a lease than have it sit on their lot.

Even under normal circumstances, there are risks with end of lease turn ins.  In most lease agreements, the finance company can charge for anything above wear and tear but the definition of what is above wear and tear is never defined in the lease.  Consumers can also be charged excess mileage, disposition fees and substantial early termination fees.

Some dealerships are telling customers that they cannot take vehicles in at the end of leases, leaving customers with responsibility for not just continuing monthly payments but also insurance and mileage charges. Making matters worse, finance companies are telling consumers in this situation to simply contact the dealership, without any resolution.  Another current tactic of dealerships and finance companies is to tell lease holders that they have to agree to a lease extension or that the vehicle can only be returned if the customer agrees to lease a new vehicle.

What dealerships and finance companies in these situations are ignoring that a lease agreement is a binding contract.  Neither the dealership nor the finance company can force a consumer to extend a lease or enter into a new lease for another vehicle unless that is expressly written in the original lease agreement.

Dealerships will claim that the inability to accept return of the vehicle at lease end is a finance company problem and finance companies will claim that it is a dealership problem, with neither taking responsibility.  In truth, both the dealership and the finance company have responsibility under the lease.  The dealership where the consumer gets the car is typically listed as the lessor in a new vehicle lease agreement.  There is usually a clause near the end of the lease contract assigning the lease to a finance company.  This assignment language is between the dealership and the finance company and not the consumer, so the assignment does not extinguish the consumer’s rights against the dealership.  Under this assignment, both the dealership and the finance company have responsibilities for a lease, no matter how much they try to shift the responsibility to the other.

What can a consumer do when a dealership claims that it can’t take a vehicle back at the end of the lease?  The first step is to listen carefully to what the dealership is telling you.  It may sound like the dealership can’t take the vehicle back when what they are really saying is they don’t want to take it back.  Let the dealership know that even if it is inconvenient for them, they still need to take the vehicle back.

If the dealership is still uncooperative, contact the finance company where you send your payments.  The finance company can contact the dealership to set up the turn in or refer you to another dealership to accept the car.  The finance company may also try to get you to agree to extend the lease.  If an extension of the lease is something that is helpful to you, tell the finance company you want your payments reduced.  If you reach a deal, it should be a reduction in the amount of the payments and not simply a deferral.  With a deferral, you are still be responsible for the full amount of the lease payments and will have to pay the full amount at a later date.

Document your contacts with the dealership and finance company.  Keep track of when you call, who you spoke with and what they said.  If you reach some sort of agreement for a lease extension or reduction in payments for the lease, tell the dealership or finance company to confirm that agreement immediately by email.

When you do turn the vehicle in, take pictures inside and out so you can fight any claims of damage made after the turn in.  If the dealership claims your vehicle was damaged, contact the finance company to obtain its damage guidelines.  If the damage on your vehicle doesn’t fit within the specific written guidelines for what is chargeable, then you can likely get the charge waived.

Do not simply drop the vehicle and keys off at your dealership without arranging for the turn in, expecting that the dealership will find it and take care of the rest.  Dealerships lose track of vehicles on their lots even when they are fully staffed.  It could be days or weeks for a dealership with minimal employees to find your vehicle and figure out what to do with it if you do not arrange for the turn in.  While your vehicle is waiting to be found by dealership employees, the finance company will continue charging you for lease payments and you could be responsible for any damage that happens on the lot.

If it is time to turn in your vehicle and you simply cannot get the finance company or the dealership to cooperate, or if you are improperly charged for a leased vehicle that you turned in, you may need to consult an experienced lemon law attorney.