Whilst it might not be something we like to think about, planning ahead for unfortunate events like this is never a bad thing – particularly if you've took out a longer lease.
So . . . who takes over the wheel? Who pays the car finance agreement? Or can the vehicle simply be handed back with nothing left to pay?
Although it won't be us who you contact in the event, we've put together a short guide to help explain the process.
What You Should Do First
If the leaseholder passes away, contact your leasing provider as soon as possible. They will need:
- The name of the deceased contract holder
- The registration of the vehicle
- Your relationship to the deceased
- A copy of the death certificate
What Will Happen to the Lease?
Quite a few things could happen in the event of the contract holder's death, depending on the leasing company and whether you actually want to take over the lease:
– You hand the vehicle back for a fee (early termination agreement)
– You hand the vehicle back as part of an early termination agreement and the provider chooses to waive the fee (at their discretion)
– The leaseholder's relatives/estate (you) take over the lease
– The leaseholder's guarantor (if they put one down when they signed the contract) takes over the lease
– In the case of a joint agreement, the other person becomes responsible for the lease
Different providers and leasing companies may have different policies on the matter, so we would recommend reading your contract and/or reaching out to them in the first instance.
Why Isn't the Leaseholder's Death Automatically Treated as a Completion of Contract?
Leasing companies don't take pleasure in unfortunate circumstances, but at the end of the day, they're still a business that has to make money.
There's no 'car lease death clause UK' whereby a lease agreement is automatically considered void or fulfilled upon the leaseholder's death.
So if you want to give the vehicle straight back following the death of the leaseholder, it's normally treated as an early termination (also known as a voluntary termination).
This means that whilst you will normally be able to hand the vehicle straight back, you may have to pay an early termination fee in order to do so – normally consisting of 50% of the outstanding finance of the lease (though certain providers may ask for the total amount). So the closer the leaseholder was to the end of the lease term, the better.
For example, if the lease was £300 per month for 2 years and the leaseholder passed away at the 1-year mark, then the early termination fee would be £1800 (50% of 300 x 12).
In What Circumstances Could the Fee be Waived?
Do your best to negotiate if needed, but it's really up to the relevant finance provider whether they choose to waive the fee and let you hand the vehicle back free of charge. Or they could choose to reduce the fee.
They may be more prepared to do this if the lease contract was fairly close to completion at the time of death.
What if You Don't Have Enough Money to Pay the Early Termination Fee?
Provider not budging?
Then it may be possible for you to transfer the lease to a willing driver. You don't necessarily need to know them personally. As long as they understand the terms and are happy to take it over.
Some leasing companies might not allow this though, so check your contract.
As a last resort, you may wish to seek legal or professional advice.
Summary
All in all, there's a few things that could happen in the unfortunate event that the leaseholder passes away before the contract is finished. If you fancy taking over the lease and can afford the monthly payments, then that's normally not a problem. Or if not, then you will normally be able to get the vehicle off your hands and back to the provider, either with or without an early termination fee.
FAQs
What happens to a car lease if someone dies?
The responsibility for the lease agreement typically passes to the deceased's estate /relatives, who can then either choose to take over the lease and keep making the monthly payments till the contract's over, or terminate the lease early and hand the vehicle back for a fee, unless the provider chooses to waive the fee. Your estate could also choose to transfer the lease to another person, depending on if the lease contract allows it.
What happens to a lease on death?
Either the lease falls into the hands of the deceased person's relatives/estate or they can choose to terminate it early. In other words, if a leaseholder dies partway through the lease, that isn't usually classed as a completion of the lease agreement and the leftover payments remain outstanding.