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Responsibility for paying mileage overage on lease?

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Anonymous
Not applicable

Responsibility for paying mileage overage on lease?

So I co-signed on a lease for someone a few years back. There are 4 payments left, which I'm fairly confident she'll make, as she hasn't missed one yet. I know for a fact that her mileage is significantly over the 12k/yr specified on the contract. When she brings the car back, is she responsible for paying that or am I also liable as the co-signer? Not sure how that works. Thanks!
Message 1 of 7
6 REPLIES 6
StartingOver10
Moderator Emerita

Re: Responsibility for paying mileage overage on lease?

Co-signer is equally responsible for all contract payments - there is no differentiation between the amounts owed monthly and the amounts due at the end between the parties. If there were a difference, then the contract would say so - if it doesn't specify then you both are responsible for the payment.  

 

You should see the words to the effect "jointly and severally" in the agreement meaning if she doesn't pay all of it (or none of it), you are responsible for the payment. 

Message 2 of 7
Anonymous
Not applicable

Re: Responsibility for paying mileage overage on lease?

How is that overage handled?  Since the loan would be paid off, if she didn't pay the overage fee or whatever it shouldn't show up as a negative item on our credit reports, right?  Would it be sent as a bill that could in turn go into collections if not paid?  I'm just planning a little CYA on my part, as even though I know she'll make the last 4 payments I could see her pulling some sort of stunt regarding the mileage fee.  Since she'll be the one returning the car and she's the primary, I won't have any documentation or communication on this so I need to figure out a way to be informed of this.  I suppose I could contact the dealership and let them know to contact me regarding the turning in of the vehicle? 

Message 3 of 7
sccredit
Valued Contributor

Re: Responsibility for paying mileage overage on lease?

Not paying for the mileage would be no different than not making the lease payment.  It is agreed to the same as the lease payments and is an obligation of the lease.  So, yes it would go as a negative reporting of the payments.  The ONLY way to CYA on this one is to be there when the lease is returned and ensure that the overage is paid.  

Message 4 of 7
Anonymous
Not applicable

Re: Responsibility for paying mileage overage on lease?

But the mileage isn't part of the loan itself on the credit report.  There are 4 payments left and the amount owed is 4X the single payment.  Once the 4th payment is made, the loan balance is $0.  I don't see how a late payment could be reported on an account with a $0 balance.  Are you saying that the mileage overage fee would be added back into the loan before the loan closes out, so the $0 balance would go up to $X and then you'd have 1 month to pay $X?

Message 5 of 7
emptypockets
Valued Contributor

Re: Responsibility for paying mileage overage on lease?

When you sign for a lease, it usually says all fees, etc. are due at lease termination. This usually includes mileage overages, etc. Technically, all amounts due on leases are usually due and payable at the time you turn the vehicle in. The only exceptions usually are fees for damages, etc. which sometimes you will not know at turn in, depending on how the company handles lease-end inspections. Nowadays, they try to get you to do inspections a couple of weeks early, so they are aware of mileage overages, etc. - thus they can tell you then how much is due at lease end (at the time you turn the vehicle in).

 

My advice is check the contract before the vehicle is turned in and make sure there is a plan to pay any amounts due at that time.

 

Here is an example from Toyota's Lease End FAQ's:

 

What charges should I expect on my end of term invoice?

 

Like you, we hope you have no charges on your lease-end, but it's possible these may be included, if applicable:

 

  1. Excess wear and use
  2. Excess mileage
  3. Disposition fee
  4. Any past due and unpaid monthly payments
  5. Any other miscellaneous charges (e.g., unpaid late payment fees, taxes, tolls)
  6. Any other charges due under the terms of your lease agreement if your lease was terminated early
2Charges may vary based on the terms of your lease agreement, whether any optional protection plans were purchased and such coverage applies

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Message 6 of 7
sccredit
Valued Contributor

Re: Responsibility for paying mileage overage on lease?


@Anonymous wrote:

But the mileage isn't part of the loan itself on the credit report.  There are 4 payments left and the amount owed is 4X the single payment.  Once the 4th payment is made, the loan balance is $0.  I don't see how a late payment could be reported on an account with a $0 balance.  Are you saying that the mileage overage fee would be added back into the loan before the loan closes out, so the $0 balance would go up to $X and then you'd have 1 month to pay $X?


Essentially, yes 

Message 7 of 7
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