What Happens if I Damage My Leased Car?

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Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


, Contributing Writer - December 15, 2020

Accidents happen, and when they do to leased vehicles, it can be stressful. Since a leased car isn’t technically yours and you’re expected to return it in a similar condition as when you got it, what should you do if you damage it? You have a few options you can explore.

1. Eat the Cost

When you lease a vehicle, the lessor can charge you for “excessive” wear and tear. Minor things like scratches smaller than a quarter on the exterior may not incur any extra costs and they’re likely to fall within normal wear and tear. Anything bigger probably means paying more cash out of pocket when you return it.

The option not to fix the damage takes the least amount of effort – all you have to do is pay the leasing company at the end of the lease. Depending on the severity of the damage, you may not have to pay extra out of pocket if you made a big enough security deposit that covers the cost of repairs.

Sometimes, too, you have the option to purchase a damage protection plan when you’re finishing up your leasing paperwork. It’s an additional insurance plan that usually covers minor damage (in addition to your regular full coverage).

Check your leasing contract to see if you have it, and if you do, check if the damage you have is covered under that plan. If the damage isn’t covered or you don’t have it, then you could take the car to the dealer and see how much it’s going to cost you to return it with the damage and/or fix it.

If the cost to fix it is less than the fee of returning it damaged, then it’s probably a good idea to simply fix it before the lease ends.

2. Report it to Your Auto Insurance

Once you find out how much the damage would cost you to not fix it, consider just submitting a claim with your auto insurance. You should do this especially if the cost of returning a damaged vehicle is more than your insurance deductible.

Leasing a car means being required to carry full coverage, so many things are likely to be covered under your insurance policy. While telling your insurance provider that the vehicle’s been through an accident and/or has damage can lower its resale value because it gets noted in the vehicle history report, that isn’t really something you should be too worried about. The only time you should be concerned with your leased car’s resale value is if you want to buy it at the end of lease.

If the accident was your fault, you could face higher premiums on your insurance plan if you report the damage, so be prepared for that.

3. Roll Over Damage Cost Onto Next Lease

If you’re looking to lease again, and the damage is too much to pay out of pocket, you may be able to roll over that cost on your next lease. However, any rebates or discounts you get for leasing again could be negated by that extra cost. This could mean having a higher monthly payment, too.

4. Buy Out the Lease

If you don’t want to pay for the damages, you could buy the vehicle at the end of the lease. Leasing companies charge extra for damage that’s done while you’re leasing because they usually intend to sell it as a pre-owned car. But if you buy it yourself, the leasing company doesn’t have to worry about fixing it up to sell it.

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Leasing a vehicle means keeping it in good condition. Auto leasing isn’t for everyone, especially if you’re rough on your car or you drive a lot. Financed vehicles don’t come with mileage limits or condition restrictions, and you can choose to leave non-threatening, minor damage unrepaired.

Not every dealership can work with less than perfect credit, though. If you’re struggling with credit issues and you need an auto loan, start with us at CarsDirect. We’ve created a nationwide network of dealers that are signed up with bad credit auto lenders, and we want to look for one in your area. Fill out our free car loan request form and we’ll get to work.

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, Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


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