Car lease termination under Servicemembers Civil Relief Act by active-duty servicemembers is possible if the servicemember or their dependents used the vehicle for personal or business purposes.
Active-duty personnel can terminate the vehicle lease if they signed it before they went on active duty. Under certain circumstances, they may also terminate if they signed it while on active military service. Some examples are if they receive orders of a permanent change of station (PCS) outside of the U.S. or orders to deploy for more than 180 days.
Activated reservists and certain National Guardsmen can terminate their leases if they entered into them before active duty and the active duty continues at least 180 days.
How Can a Servicemember Terminate a Motor Vehicle Lease?
Servicemembers need to send a written notification to the leasing company, enclosing a copy of the military orders. The servicemember must have the notification hand-delivered, delivered by U.S. mail (return receipt requested) or sent via a private carrier, like Fedex. The envelope must contain a letter from the servicemember that says that they are terminating the vehicle lease. The terms usually require an odometer statement as well.
Download a Sample SCRA Lease Termination Letter
The servicemember must return the vehicle within 15 days of the leasing company’s receipt of the envelope.
Once the leasing company has the notice and the car, the lease is terminated. The leasing company may not ask for an early termination fee. However, all amounts due on the lease through the termination date must be paid. That includes taxes, vehicle registration fees and any damages to the vehicle. The leasing company also must refund any lease prepayments made within 30 days of the termination.
A leasing company can challenge the termination by going to court to try to prove that the servicemembers’ orders did not permit a terminate, that military service did not affect the servicemembers’ ability to pay the lease payments (if, for example, the servicemember was wealthy or receiving money from other sources) or that the dependent does not qualify for SCRA protections.
A leasing company may not repossess a vehicle or terminate a lease of an active servicemember without a court order if the servicemember signed the lease before active duty began. In fact, violations of this rule can result in fines and imprisonment.
Under most circumstances, a vehicle lease cancellation under SCRA is a fairly straightforward and relatively easy process. But the servicemember must supply the proper documentation.
Be cautious when repossessing any vehicles. Always check the lessee’s military status first. Depend on the Servicemembers Civil Relief Act Centralized Verification Service to help you get the documentation you need.