Divorce is a complicated and emotionally challenging process, and it can be even more complex when the division of assets is not straightforward. One such case is when a vehicle is leased instead of owned.
What is a vehicle lease?
A vehicle lease is an agreement between an individual and a leasing company where the individual agrees to make monthly payments in exchange for using a vehicle. Unlike purchasing a car outright, a lease does not result in ownership. Instead, the individual is essentially renting the vehicle for a specified period of time, typically three to four years.
The mileage and condition of the vehicle at the end of the lease can affect the buyout price, and it’s important to take this into account when dividing assets during a divorce. In the state of Illinois, even if only one spouse’s name is listed on the lease of a vehicle, the other spouse still has a legal right to claim half of its value in the case of a divorce.
Options to consider for a leased vehicle in a divorce
When dealing with a leased vehicle in a divorce, there are a few options to consider. Some possibilities that you may want to explore are:
- Buyout the lease: If the leased vehicle is considered marital property, you and your spouse can choose to buy out the lease and keep the vehicle. This route can be a good option if both of you want to continue driving the car or if one of you needs a new car. Keep in mind that this option may come with additional fees and costs.
- Sell the vehicle: If neither you nor your spouse wants to keep the leased vehicle, you can choose to sell it and split the profits. You’ll need to check with your leasing company to see if there are any penalties for ending the lease early, but this can be a good way to get some cash back from a vehicle you no longer need.
- Return the vehicle: Depending on where you are in the lease term, you may be able to return the vehicle to the leasing company and walk away without any further obligations. You may need to pay some fees or penalties for ending the lease early, but this might still be the best financial choice if neither you nor your spouse wants to keep the vehicle.
- Assign the lease: If one spouse wants to keep the leased vehicle but can’t afford the buyout, you can choose to assign the lease to that person. This option means they will take over the lease payments and responsibilities for the remainder of the lease term. Keep in mind that this option will need to be approved by the leasing company and may come with some fees.
Regardless of which option you choose, it’s important to consider the financial implications. You’ll need to consider who will be responsible for the lease payments, insurance, and any upgrade packages you may have added to the vehicle. A financial advisor or divorce attorney can help advise you on the best decision for your specific situation.