A deployed servicemember may find it a heavy burden to continue to pay for a car lease. Thankfully, the servicemember has the option to break a vehicle lease – provided certain conditions are met.
The Servicemembers Civil Relief Act (SCRA) allows an active-duty member to terminate a lease agreement without paying early termination charges or penalties. The SCRA even allows the servicemember’s dependents to break the lease. The conditions that allow this step primarily deal with the amount of time he or she is called to serve and where he or she is serving.
The local JAG office can help advise a servicemember on how best to handle the situation.
The Servicemembers Civil Relief Act (SCRA) provides important financial and legal protections for active duty servicemembers. One of these protections allows qualifying servicemembers to terminate auto loans or leases when specific conditions are met.
Understanding how to properly terminate an auto loan or lease under the SCRA can save military members substantial penalties and fees when transitioning between duty stations.
Overview of SCRA Auto Loan/Lease Termination
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The SCRA allows servicemembers to terminate auto loans and leases entered into before entering active duty when the servicemember receives orders for a permanent change of station (PCS) outside the continental United States or deployment for at least 180 days.
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For auto leases signed during active duty, termination is allowed for PCS outside the continental US or deployments over 180 days.
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Written notice and a copy of orders must be provided to the lender/lessor for termination along with return of the vehicle within 15 days
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Early termination fees and penalties are waived but taxes, registration fees, and excessive wear/mileage charges can still apply.
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Auto loans can’t be terminated but lender must allow shipping vehicles overseas if agreed upon in original contract.
Eligibility Requirements for Termination
To qualify for auto loan or lease termination under SCRA, you must meet one of these eligibility conditions:
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Entered agreement before active duty and then received orders for 180+ day deployment or PCS outside continental US
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Entered agreement during active duty and then received qualifying PCS or deployment orders per below:
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PCS from inside continental US to outside continental US
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PCS from outside continental US to any location
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Deployment over 180 days in support of military operation
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Regular PCS orders within continental US do not qualify for lease termination.
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Auto loans signed before or during service cannot be terminated but may be able to be shipped overseas if stipulated in contract.
How to Terminate Your Auto Lease Under SCRA
Follow these steps to properly terminate your eligible auto lease:
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Provide written notice of intent to terminate to lessor/agent via certified mail, hand delivery, or electronic means.
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Include copy of official military orders with written notice.
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Return leased vehicle to lessor within 15 days of delivering termination notice.
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Document return of vehicle and complete final inspection report noting any excess wear/mileage.
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Pay any outstanding amounts owed such as overdue payments, excess mileage/wear charges, taxes and registration fees.
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Receive refund of any paid upfront amounts within 30 days of termination.
Key Points on Auto Loan Termination
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Auto loans can’t be terminated under SCRA like leases.
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However, if your auto loan allows transporting the vehicle overseas, you must provide written notice and orders to lender.
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Get overseas shipping approval in original auto loan contract before signing.
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Most warranties aren’t valid overseas – have warranty exceptions noted in contract.
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Contact legal assistance office for help if lender won’t allow overseas transport of vehicle.
What Fees Still Apply When Terminating?
While SCRA waives early termination penalties, some fees can still apply:
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Excess wear and tear charges based on vehicle condition
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Excess mileage fees if over allotted limit
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Unpaid taxes and registration costs
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Any missed or overdue payments and interest
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Disposition fee if not purchasing vehicle
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Other outstanding fees owed per contract
Alternatives if Lender Won’t Allow Overseas Transport
If your auto loan doesn’t allow transporting your vehicle overseas and you receive qualifying PCS orders, consider:
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Requesting exception from lender to take vehicle abroad, provide reason and orders
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Trading vehicle in and purchasing one lender permits transporting
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Selling vehicle and buying one at duty station location
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Voluntary repossession if unable to sell or afford payments
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Seeking assistance from legal office to negotiate with lender
What to Do if Lessor Won’t Honor Lease Termination
If your lessor refuses termination or charges improper fees, take these steps:
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Submit written complaint to lessor explaining situation and your rights under SCRA
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Escalate to lessor management and cite exact SCRA provisions that allow termination
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Contact legal assistance office on base for help engaging with lessor
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File complaint against lessor with Consumer Financial Protection Bureau
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Consult with Judge Advocate General about pursuing action in state court
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Contact your Congressman/Senator’s office for constituent assistance
Avoiding Issues with Auto Loans and Leases
To prevent issues when needing to terminate agreements under SCRA:
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Review contracts carefully before signing and negotiate military clauses
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Understand SCRA eligibility rules for termination versus suspension
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Keep records of contract details, orders, notices, and replies from lenders/lessors
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Act promptly when have qualifying orders to terminate lease or transport loan
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Seek legal assistance for clarification on rights and process
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Document all correspondence and return of vehicle if terminating lease
Key Takeaways on SCRA Auto Loan/Lease Termination:
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SCRA allows terminating auto leases (not loans) under certain PCS and deployment orders
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Written notice and copy of orders must be promptly sent to lessor when eligible
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Leased vehicle must be returned within 15 days of termination notice
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Loans can’t be terminated but may allow overseas transport if stipulated
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Fully understand rights and required process to exercise lease termination option
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Consult legal assistance office if lessor refuses compliance or improper fees charged
The SCRA provides important safeguards on consumer agreements to protect active duty servicemembers. Carefully reviewing auto leases and loans and exercising your termination rights can provide more flexibility and prevent unnecessary costs if ordered to relocate or deploy.
What Is the SCRA and Who Is Covered?
The SCRA was enacted by Congress in 2003 and has been amended several times since. According to the U.S. Department of Justice, the act is “designed to ease financial burdens on servicemembers during periods of military service.”
The act covers active-duty members of the military – which includes members of the Army, Navy, Air Force, Marines and Coast Guard. It also protects members of the National Guard serving more than 30 days and commissioned officers of the Public Health service and the National Oceanic and Atmospheric Administration in active service.
Dependents of servicemembers – a spouse or child – are also given protections in certain situations.
Protections are in areas related to rental agreements, security deposits, prepaid rents, evictions, installment contracts, interest rates on credit cards and mortgages, insurance, income tax payments and car leases. Courts have supported the Service Members Civil Relief Act and interpreted it to mean it should be read in favor of servicemembers.
The idea of the law is to allow servicemembers to concentrate on their mission. To accomplish that, it allows military members to postpone, suspend or get out of certain financial obligations that might cause distractions or monetary problems.
Military Car Loan Forgiveness Eligibility
The specific conditions that allow a servicemember to terminate a lease are:
- You must have entered into the lease prior to active duty and be called to active duty for at least 180 days. OR ..
- During active duty, you must have received orders that transferred you from the continental United States to outside the continental U.S. In military terminology this is called Permanent Change of Station (PCS) inside the U.S. (CONUS) to outside the U.S. (OCONUS). (Example: If you are transferred from Fort Bragg in North Carolina to serve in Afghanistan, you could cancel the lease.) OR …
- A permanent change of station outside the U.S. to another location. OR …
- You’ve been deployed with a military unit in support of a military operation for at least 180 days.
Think OCONUS to mean outside the continental United States – that is, the 48 states other than Hawaii and Alaska. Think CONUS to mean the lower 48.
If you are transferred, say, from Texas to Hawaii or Ohio to Alaska, that is CONUS to OCONUS and you can get out of the lease.
If you are transferred from OCONUS to another location – be it a state or another country — you also can get out of the lease. Examples include being transferred from Alaska to Texas or from Hawaii to Germany.
However, you cannot get out of the lease if you are transferred within the lower 48 – CONUS to CONUS. Being transferred from California to Texas or North Carolina to Wyoming would not qualify.
The Consumer Financial Protection Bureau cautions that if you think you might enlist, it’s wise to read and understand the lease terms before signing a contract. Because transfers within the lower 48 do not allow you to terminate the lease, it’s important to ask the company you are leasing from if you are permitted to take the vehicle out of state. That is key information if you believe you will be stationed primarily in the lower 48.
CAR LEASE TRICK for Military – ServiceMembers Civil Relief Act – 2021 Charger SRT Hellcat Widebody
FAQ
Does the SCRA apply to car loans?
Can I get out of a car loan with military orders?
Can I use military deployment as an excuse to get out of a car loan?
Can you cancel a car lease with military orders?
How do I terminate an auto lease without penalty under SCRA?
In order to terminate an auto lease without penalty under the SCRA, you must have entered into the lease: deployment with a military or uniformed unit or in support of a military or uniformed operation for 180 days or longer.
Does SCRA cover student loans?
Under the **Servicemembers Civil Relief Act (SCRA)**, servicemembers can reduce their interest rate to **6 percent** on all pre-service obligations, including **student loans**, while they are on active
What should I know about auto repossession and protections under SCRA?
I’m in the military and having trouble paying my auto loan. What should I know about auto repossession and protections under the Servicemembers Civil Relief Act (SCRA)? The SCRA gives active-duty servicemembers certain legal and financial protections relating to installment contracts, like an auto loan or lease.
Is there a penalty for terminating a lease under the SCRA?
Under the SCRA, all unpaid lease amounts for the period preceding the date of termination shall be prorated. The SCRA prohibits any lease termination charges or penalties. Please find the copy of My Orders to Deploy / PCS / Letter from CO.