Expert Q&A

Don’t turn in the keys, walk away from truck lease


Seven months after leasing a new truck, a woman realizes she’s in too deep and needs to get out of her lease.

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Dear Credit Guy,

I leased a new pickup truck seven months ago and realize it might have been a big mistake. If I “turn the truck in,” will that have a bad effect on my credit rating? I am prepared to pay whatever penalty and loss of the value of truck. What a hard lesson!

Dear Linda,
What a hard lesson is right!

The simple answer is yes, if the dealership reports to the credit bureaus, which it probably does, turning in the truck before the lease has expired without making all the required payments will negatively impact your credit rating. It is viewed as a repossession on your credit report and is a big negative hit. If you choose this route, not only will your credit report suffer, but you will still owe the amount left on the lease plus penalties.

Before you turn the truck in, I want you to consider several alternatives. First, determine the buyout amount for the lease and then figure how much the truck is worth if you were to sell it to a third party. The amounts are likely different and not in your favor, but may be less than paying off the lease and penalties, not to mention the fact that selling the truck and buying out your lease will not negatively hit your credit.

Second, you could lease a different vehicle from the same dealer. You will want to know the amount of equity you currently have in the truck. If you have negative equity (where you owe more than the truck is worth), which you likely do, you will need to pay the difference or have it added to your new lease. However, before you have it added to a new lease, make sure you can afford the payments!

Third, you may consider a lease swap. This may be an option for you if the dealership allows your lease to be transferred to another person. I would recommend that you use either or to find a person willing to take over your truck lease. For a fee, these sites will place an ad for your lease and people interested will contact you. The company will process all the needed paperwork and you will not have to pay any penalties or be responsible for the remainder of the lease.

One caution — some dealers do not allow the original leaseholder out of the financial responsibility for the lease should the new leaseholder not pay as agreed. If you go with a lease transfer, be sure you know if your dealer is one who will hold you responsible for the original lease even after it is transferred.

A last thought — if you have a specific circumstance such as a divorce, job layoff or other major life event that has caused you to rethink the lease, your dealer may be willing to let you out of the lease without it damaging your credit. It never hurts to explain extenuating circumstances and see what they are willing to do.

Take care of your credit!

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