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    Gotta Get Out Of A Car Lease Early? (Here Are Some Tips That'll Lower Your Financial Hit) Plus: Why Moving Out Of The Country Can Destroy Your Credit Scores!
    September 25, 2003

    Dear Ben: Do you have any recommendations for someone leaving the country for an indefinite amount of time, yet still has 30 months remaining on their auto lease? Here's my situation: My leasing company is Bank of America. I know I can sell the car and then owe the remaining balance to them, but that could cost me thousands. Is there a way I can simply return the car and be done with it?

    Justin D., via e-mail


    Dear Justin: There's several points to cover before you head for the airport but let's first try to minimize the potential financial damage from your pending lease-related liability. According to my leasing expert, Ray Stafin, Sr. of www.myleasingco.com: "We've seen this in the past...and legally there's only two options. As Justin already knows, he can sell the car and make up the difference. Depending on what type of vehicle he's leased, this may actually be feasible. However, Bank of America is one of those banks that are "aggressive" with their residuals-meaning the payoff could be way out of reach.

    The second option? Make the remaining payments and ask them to pickup the vehicle. But the (potential) problem with this is that the bank has the option (even though all the payments are being made) to report the vehicle as a voluntary repossession on his credit report. However, they are known to make exceptions.

    There's another way to handle this, but it's illegal. Justin could have someone take over his payments (this is called "sub-leasing"). It's usually against the terms of standard lease contracts, but it's done every day. There's still a high risk for lease customers that go this route because they continue to remain on the hook on the original lease agreement and the sub-lessor (the person taking over the payments) doesn't appear anywhere on the contract.


    A bigger (very real) threat remains: Justin's credit could be ruined if the sub-lessor fails to make the payments on time, or they trash the vehicle while it's in their possession-setting him up for a lawsuit to recover damages (in the form of excessive wear-and-tear) once the vehicle's finally returned at the end of the lease. He can simply return the vehicle and take a repossession hit on his credit report, especially since he'll be out of the country. It won't really matter until he comes back; it'll stay on his credit bureau reports for up to 7 years. Have him contact us; with a little more information I'll be able to tell him how much turning the vehicle in early will end up costing him."

    While you might not be moving out of the country like Justin, the financial messes you're facing in your current vehicle might make you want to head for the border! Relax. I've added a slew of new information on my website that'll hopefully help you avoid (or at least minimize) looming financial brain-damage: From early lease terminations to working out of a financial jam if you're "buried" (also known as being "upside-down" in car lingo); tools to help you make the "lease or buy" decision...on-line payment calculators, as well as the perennially hot topic: What to do if you're over the miles allowed on your current lease (or getting dangerously close, anyway). Buckle up and check it out: www.bendover.com/cartips.asp.

    Dose of Dover For The Week: There was a terrific story that appeared in The Wall Street Journal recently that Justin (or anyone else facing a move outside of U.S. borders) might want to check out on-line at www.wsj.com. You may already know that paying bills late, getting slammed with judgments and tax liens, or filing for bankruptcy will trash your credit reports in a heartbeat. But the Journal's September 11, 2003 article touched on another FICO-score destroying fact that I've been warning consumers about for years: Moving out of the country will be hazardous to your credit history health. Sure, the Big Three U.S. credit reporting agencies (Experian, Equifax and TransUnion) have operations overseas, but your credit history can't legally cross the borders. Why? Blame privacy laws that differ in each country, compounded by fraud-related fears. Not to worry...I've got more information that'll make your credit scores (but not your blood pressure) rise: www.bendover.com/creditreporthelp.asp.

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