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How Does Leasing a Car Work?
Leasing a car is much like a long-term rental. Customers are required to make an upfront payment, plus monthly payments, in exchange for using the vehicle for several years. At the end of the lease, the car will be returned and customers have to decide whether they want to start a new lease, purchase a vehicle, or go without one.
What to do After a Leased Car Accident
If you have an accident in a leased car, your first step is to figure out whether anyone is hurt or not. After that, call 9-1-1 and report the accident to the police. Next, contact your insurance company.
Finally, report the accident to your lease company, which is the vehicle's legal owner. Your lease may specify the timeframe by which you must report the accident to the leasing company. The company may require you to repair the car unless it is totaled.
When is a Vehicle Considered to be Totaled?
A car is considered to be a total loss when the overall cost of damages approaches or exceeds the value of the vehicle. Most insurers determine a car to be totaled when the vehicle's cost for repairs plus its salvage value is over the actual cash value of the vehicle.
Will Totaling a Leased Vehicle Affect My Credit Score?
Fortunately, accidents that result in a leased car being totaled won't directly affect your credit scores. Credit scores are based specifically on the information in your credit report and don't include things like your driving record or prior insurance claims.
What if My Leased Car is Worth More than the Buyout?
In rare cases, your car may increase in value for reasons not anticipated when the buyout price was agreed upon in the lease. If the vehicle is worth more than the buyout price, it can provide an opportunity to purchase the car, sell it, and keep the remaining money.
Can I Sue Someone for Totaling My Car?
Yes. You should not have to pay for another person's mistake. If the negligence of another person caused the crash that resulted in your car being totaled, you may be able to file a claim with their insurer or file a lawsuit against them to pursue compensation for damages.
FAQs
Can I end my lease early if my car is totaled?
Yes, if your car is totaled, the lease typically ends early. The insurance payout and GAP insurance (if you have it) cover the lease balance, but you may still owe fees or costs not covered by insurance.
What happens to my lease payments after the car is totaled?
After the car is totaled, you typically stop making lease payments. The insurance payout, along with any GAP insurance, should cover the remaining lease balance. Check your lease agreement for specific terms and conditions.
Do I need to continue paying for insurance after my leased car is totaled?
You should keep your insurance active until the claim is settled and the lease is officially terminated. Once the process is complete, you can cancel the insurance policy on the totaled vehicle.
Can I get a replacement vehicle after totaling a leased car?
Yes, after totaling a leased car, you can lease a new vehicle. You will need to negotiate a new lease agreement and may have to pay any outstanding amounts not covered by insurance for the totaled vehicle.
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