How to Handle a Co-Signed Auto Lease During & After Divorce

What to Do If You Share an Auto Lease and Are Getting Divorced?

Having a leased vehicle is fairly common.  The borrower/s pay a monthly payment for the length of the lease.  At the end of the lease, the borrower/s can pay to purchase the car or turn the car in and lease a new car.  But, what happens if you get a divorce and there is still time left on a vehicle lease?  Who gets to use the car?  Who pays the monthly payments?

Determining the Value of a Leased Vehicle

Because your vehicle is leased, determining the value of the asset can be tricky.  Further, termination a lease prematurely on a vehicle can be fraught with additional costs such as early termination fees.  While some may consider a lease to have a $0 value, it may actually have a negative value.

Don’t Wreck Your (or Your Spouse’s) Credit

If you simply choose to not make a payment on the lease because you are in the middle of dividing assets during your divorce it could have negative consequences.  So, continue to pay the monthly amount due on time.

Disposition of the Lease Obligation

Working with a mediator, consider the disposition of this lease obligation. One option would be for on spouse to pay the lease with the other remaining jointly obligated to the end of the lease term with built in safeguards to assure that the lease payments are timely made so that the spouse who remains jointly obligated credit rating is not adversely affected. Another option would be to negotiate a modification of the lease with the financial institution that holds the lease such that the spouse who will no longer be obligated is exonerated from any liability thereunder.

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