Lease default and Forfeiture

What is the meaning of the expression 'default' when applied to forfeiting a lease agreement. The general misunderstanding is that it applies simply to missing a few payments or simply stopping the payments altogether and not making arrangements with the funder to deal with the problem.

The actual meaning is much wider and means that you have broken one or more of the terms of the agreement. The list of defaults, as interpreted by the lendor, can be very long. Some of the more common ones are:

1. Fail to make payments due on the due date or within a fixed period.
2. Fail to insure the vehicle Fully Comprehensively
3. Attempt to sell, charge, pledge or mortgage the vehicle
4. Fail to report any material change of circumstances likely to be disadvantageous to the funder - in their opinion.
5. Remove the vehicle from the UK without the funder's written permission.
6. Breach any term of the agreement that is capable of being remedied but fail to remedy the breach within a set period
7. If you enter into a voluntary arrangement with your creditors in order to settle debts.
8. If you enter into bankruptcy
9. If you fail to meet your obligations under a finance agreement.
10. If any distress is executed by a third party (such as assets being taken for non payment of tax or VAT)
11. If you transfer or dispose of a substantial part of your assets.
12. If you admit you are unable to meet your debts as they become due.

Clearly if you experience difficulties the first thing you must do is contact the funder. Most can be reasonable and would be understanding, allowing you to restructure or come to an arrangement - often without any adverse effect on your credit rating. Ignore the funder and the chances are that you won't obtain credit for the next 3 years.

You may be able to surrender the lease or make arrangements under a vehicle voluntary surrender arrangement. Whatever you do contact your lender immediately, you do not want to get into the position of learning about car repossession law at the last minute. Your vehicle lease contract will be written to comply with vehicle lease law and vehicle repossession laws.

If you find yourself in need of more general financial advice a good site that will help you find where you can obtain advice is at Yourmoney.co.uk