When you sign a lease contract, you must make the payments in accordance with the terms set forth in the contract.

If you cannot make payments on time, the merchant has the 3 following options:

Claim the overdue payments

The merchant can demand that you make all payments that are late.

Repossess the vehicle

The merchant can send you a notice of repossession requiring that you make all overall 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 first notifying you in writing.

Claim payment of all instalments

The merchant can send a notice of forfeiture of benefit of the term, along with a statement of account. In that notice, the merchant will require that you make the late payments, within 30 days, failure of which all instalments provided for in the contract will be claimed (this includes late and upcoming payments). 

Your contract must include a clause to that effect in order for the merchant to be allowed to send you such a notice.

Should you receive a notice of forfeiture of benefit of the term, you can petition the court within the 30-day deadline to be granted authorization to return the automobile to the merchant (at a lower cost than if you were to do so without authorization) or change the payment terms.

A solution

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

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Last update : September 11, 2019

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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.