SCRA Vehicle Lease Termination

Are you an active-duty servicemember or dependent in need of motor vehicle lease termination?

Under the Servicemembers Civil Relief Act, you can be eligible for motor vehicle lease termination if you used the motor vehicle for personal or business purposes. This act provides those who are serving their country legal protections regarding motor vehicles, helping to free up financial resources and reduce stress during military service.

If your current motor vehicle lease situation has been impacted by your service, explore options available under the Servicemembers Civil Relief Act and get back on steady ground.

SCRA allows vehicle lease termination

How does it work?

Active duty military personnel are covered by the Servicemembers Civil Relief Act (SCRA) and are allowed to terminate their vehicle lease if they signed it before active duty or while active.

In addition, military personnel can also be released from their lease under circumstances such as active deployment for over 180 days or a permanent change of station outside of the US.

However, a fee may still be due in the form of paying early termination charges- these must not exceed an amount equal to one hundred and fifty percent (150%) of the total amount remaining on the lease. Military personnel should take advantage of this SCRA benefit when necessary.

Does it apply to active duty military service?

Activated military reservists and National Guardsmen who have been called into military operation, as well as service members who are on active military duty in the continental United States, may terminate their existing leases if they were entered into before the military operations began and continues for at least 180 days.

The military code provides these protections so that military personnel can answer their call of duty without worrying about personal obligations or penalties due to financial situations. So if you’re a military service member whose lease was written prior to the commencement of your active service, be sure to take advantage of this benefit in order to take care of your military obligations.

How Can a Servicemember Terminate a Motor Vehicle Lease?

As a member of the military or a military unit, if you are called to active duty, you need to take prompt action when it comes to your vehicle lease. Just like military orders are binding on military units, so is the military servicemember’s lease agreement with their leasing company.

But fortunately, there is help for military members in this area — the military can provide relief from personal financial obligations through written notification to their leasing company. For example, the service member must have a letter hand-delivered, U.S. mail (return receipt requested), or a private carrier like FedEx that states their termination of the lease and includes a copy of military orders and other necessary documentation such as an odometer statement.

Take time to read over all of your rights as a military serviceperson when dealing with this detail. Additionally, you may need to ready forms such as:

  • Letter of Intent to Transfer Ownership and Terminate Lease
  • Statement of Odometer Disclosure
  • Notice to the Lessor of Termination
  • Auto Lease Registration Fees
  • Notification of Replacement Vehicle or Sale by Lessee
  • Servicemembers Civil Relief Act (SCRA) Eligibility Statement

In short, if you are a military serviceperson, take the time to review your rights and obligations under the Servicemembers Civil Relief Act.

How File A Claim?

Vehicle lease termination

First, the service member 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. Again, that may include 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 servicemember’s orders did not permit a termination, that military service did not affect the servicemember’s 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 might 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.

Final Note

Serving your country is an honorable and noble pursuit. That’s why the Servicemembers Civil Relief Act exists, to provide military members special protections from a variety of civil obligations including motor vehicle leases. Knowing your rights and understanding what you need to do in order to terminate your lease will ensure that you are able to fulfill your military obligations without worrying about the financial consequences. It is important to remember that you have rights, and you should take advantage of them whenever necessary. Good luck!

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