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Does breaking your car lease affect your credit rating?
I’m currently leasing my car and I’m kind of over it. I really want a new car, but I’m worried about how terminating my lease early will look. Will my credit score go down?
Pat Roache · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
This is a tricky position to be in, considering that early termination on a lease can be expensive. Breaking your car lease will not inherently affect your credit rating—but it will if you fail to pay any remaining balances with your lender.
Rather than breaking the lease, you may have better luck buying the car and then selling it privately or trying to
transfer the lease
. There is a right way to break your lease that will protect your credit score, but it often involves a hefty bill for the following fees and penalties:- Remaining lease payments
- Early termination fee
- Disposition fee (to cover costs of preparing the car for the next buyer)
- Vehicle storage and transportation
- Leasing taxes
- Differences between the lease amount and the car’s current value
Check your lease agreement, but note that most will include the early termination fees and paying off the remaining lease balance. If you are unable to handle the costs associated with breaking your lease, you will likely accrue debt and hurt your credit score.
There’s a lot to consider when navigating major decisions surrounding a lease. When you need to make space on your plate, leave the matter of [car insurance][
https://getjerry.com/car-insurance
) to Jerry
. Once you download the app, Jerry takes care of researching insurance policies to find the most competitive quotes available. That can mean big savings, with the average user saving $887 a year.MORE: How to buy a car with bad credit
View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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