When you sign a leasing contract, you agree to pay the instalments provided by the contract.

If you cannot make payments on time, the merchant can take action in one of the following ways.

Require late payments

The merchant can require you to make all late payments.

Repossess the vehicle

The merchant can send a notice requiring you to make all payments, or the vehicle will be repossessed in 30 days. This notice is called a "Notice of repossession". The merchant cannot repossess a vehicle without advising you in writing first.

Require the payment of all provided instalments

The merchant can send a notice along with a statement of account. In that notice, they will require you to make the late payments immediately, or they will require the payment of all instalments provided by your contract in 30 days' time (this includes late and upcoming payments). This notice, which is rarely used in the context of a lease, is called "Notice of forfeiture of benefit of the term". A clause for that purpose must be included in your contract for the merchant to be allowed to send you such a notice.

If you receive a notice of forfeiture of the benefit of the term, you can go to court within the 30-day delay. You can request permission to return the vehicle to the merchant (at a lower cost than if you were to do so without authorization) or ask to have the terms of payment modified.

A solution

You can decide to return the vehicle to the merchant. However, they will probably claim damages, which usually represent a substantial sum of money.

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Last update : November 24, 2017

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The information contained on this page is presented in simple terms to make it easier to understand. It does not replace the texts of the laws and regulations.