18 months left on lease with Honda can no longer afford it and want to give it back?
I have a 2018 civic I'm currently leasing from Honda and can no longer afford the lease and need to give it back. I have 18 months left on the lease but there's no way I can cont to keep making the payments. What type of penalty will I face or what should I expect to happen?
If the lease term is 36 months, and you decide that you want out after 18 months, you will be required to pay the remaining 18 months if you terminate now. If the monthly payment is $300, you will have to come up with $5,400 ($300 x 18 months) in order to get out.
The penalty will be significant and will depend on the miles and condition of the car.
Best case scenario you owe a years worth of payments. Worst case is you owe 18 months.
The reason I think it might be less than a full 18 month is the car will bring more at auction than it would in 18 months so SOME of that should find its way back to reduce the amount you owe.
But, I have never leased let alone gave one back so I could be wrong.
One thing I do know is turning the car in versus letting them come get it will save you a repo fee. (And if they later end up garnishing your wages you will wish you would have turned it in)
You will pay more than you are hoping and likely ruin your credit for the next while.
So you didn't adequate assess your ability to pay or the true costs of leasing. You apparently also haven't read through your contract to see what the fees and penalties you agreed to if you don't keep the lease until it is expired, You simply let your ego get in the way and allow you to lease a new car without using your brain.
FAIL
I can't tell you exactly how much it will cost because not all leases are the same but I can tell you that it will be expensive and the chances are high that if you can't afford the payments any more you probably can't afford the fees that will be charged if you break the lease.
You can expect to pay a lease termination fee, all the remaining taxes that may have been rolled into your monthly payment, plus the full 18 month depreciation on the car, plus excessive mileage or damage to the vehicle and any transportation and storage fees involved with turning it in. In short, unless you made a very large down payment on the order of 20 percent or more in the beginning, it is going to cost you several thousand dollars to end the lease early. If you don't have it, you're stuck with your lease.
Don't even think of letting it get repossessed because that won't get you out of still owing thousands for it and it will ruin your ability to borrow money for 5-7 years. The resulting poor credit rating can affect your car insurance premiums, your ability to qualify for some jobs or housing rentals, your ability to borrow money for higher education or get a reasonable interest rate on credit cards.
Don't turn a FAIL into an EPIC FAIL
You will be responsible for the lease payments. You should try getting someone to take over the lease. Try swapalease.com or leasetrader.com. There are thousands of people trying to get out of leases.
Your lease contract contains an early termination clause. I suggest you read it. It isn't going to be cheap. Remember, adult decisions carry adult consequences.
It's not just a simple penalty. It's much more complicated than that. Read your contract and read the section about early termination. And it's usually very expensive.
Bend over and grab your ankles. You're about to get a good reaming.
After reading your responses to some of the other posts, I think you're confused.
Turning the car back in (a "voluntary repo") doesn't mean it's charged-off and you're done with the debt. Your car will be sent to auction, where it will bring pennies on the dollar. You'll then be presented a bill for the difference between what you owed and what it brought at auction, which will be significant. If you can't pay that immediately, the lender will sue you and win easily. Depending on your state of residence, the judge may even order wage garnishment.
So, in the end, you have a repo AND a judgment against you. It doesn't just "go away" with a charge-off.
Read the lease agreement carefully. No doubt there are penalties you will have to pay if you opt out of the lease early. After reading it call them and talk to them about your options.
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