COLUMN - The Afterlife of Car Payments

Companies use early termination fees to ensure a customer continues their use of a service through the contract length. Most people would agree that treating someone’s death as an early termination of a contract is not just unfair, but deeply wrong. That is why there are laws in place prohibiting phone, television, internet, energy, and water service providers from charging additional fees after a customer has passed away.

However, up until recently, those protections did not extend to motor vehicle leases in New York State. That meant if you leased a car and passed away before the end of your contract, your estate could be charged for the remainder of the payments.

Sounds absurd, right? 

Many families attempt to cancel a car lease following the death of a loved one. One would think that this is the best option -- return the car, hand in the keys, and be done with it. Unfortunately, this well-intentioned decision would put the customer on the hook for the remainder of the payments, plus early termination fees. Additionally, in the event of a financed vehicle cancellation, most companies would end up selling the vehicle, use the profits to settle the account, and bill the estate for the leftover balance. In the worst cases, the company could repossess the vehicle and sue the deceased’s estate for past-due payments. Family members were often forced into taking over the loved one’s lease, along with hundreds or even thousands of dollars in remaining payments. 

This entire process was confusing, expensive, and stressful. We needed better protections in place to stop companies from profiting off of people’s tragedy. That’s why I introduced a bill to prevent companies from charging these horrendously unfair early termination fees if a person passes away before the end of their lease. The bill was signed into law by the Governor last week, and will take effect at the end of this month.

I believe in putting people before profits. Coping with the death of a loved one is hard enough. My hope is that this new law will help alleviate some of the unimaginable stresses that come with losing a spouse, friend, or family member. 

Senator Kevin Thomas represents New York’s 6th Senatorial District in Nassau County. He presently serves as Chair of the Committee on Consumer Protection.