What Happens if You Break Your Car Lease Because You Are Unemployed & Disabled?

By signing a car lease, you agree to drive the vehicle and make monthly payments for a certain length of time. If you become disabled and unemployed, you may have to break your car lease. Breaking a lease has consequences to your finances and your credit score, but you may have other options.

Financial Issues

When you know you will need to break your car lease, you have the option of returning the car to the dealership. You can also request a voluntary repossession. However, simply returning the car does not release you from any financial obligations. You will owe the dealership the remaining balance on your lease. Most dealerships also charge a fee for early termination. The total early termination fee is listed on your lease agreement.


If you return the car to the dealership, but do not pay the balance owed, the dealership may turn your account over for collections, which will cause a negative remark on your credit report. If you requested a voluntary repossession, the dealership will repossess your leased vehicle and arrange to have it collection from your possession. A repossession can also appear on your credit report and will damage your credit score.


If you cannot make your car lease payments, you can arrange a lease assumption with another person. In a lease assumption, someone else agrees to take over your leased vehicle and begin making the monthly payments. You will have to pay a transfer fee for the dealership to change the name on the lease, but this fee will cost less than paying off your full lease.


Talk to the dealership as soon as you become disabled and unemployed and know you will not be able to continue to make payments. The dealership can help you determine how much you owe and what you will need to do to prevent damage to your credit score. Act quickly to avoid negative remarks on your credit, as these remarks will stay on your credit report for several years.