Consumer Confidential: Dying to get out of a car lease? Not a chance
If you lease a car, don’t think you can get out of payments just because you’re dead.
Death, it turns out, is considered “early termination” of your contract, and that can mean thousands of dollars in penalty fees.
Sally Shafton, 81, learned this recently after her husband, Bob, died of prostate cancer. She now faces charges totaling $2,352.72 from Toyota Financial Services.
Her husband leased a new Prius from Manhattan Beach (Calif.) Toyota a year ago. He knew at the time he was ill but, according to his wife, “the salesman assured him that death would qualify for interruption of the lease.”
After her husband passed away in December, Shafton contacted Toyota Financial Services, explained the situation and said they could come and collect their Prius any time they wanted.
It took a few weeks, but a Toyota worker eventually arrived at Shafton’s home and drove off in the car.
“I breathed a sigh of relief and forgot about the whole thing,” she recalled.
Last month, however, Shafton received a letter from Toyota Financial Services informing her she owed the company all sorts of money, including $225 for the cost of “repossessing and transporting” the Prius and $83 to recondition the vehicle.
“Recondition?” Shafton said. “It was a new car that we’d had for only nine months. And Bob was so ill he rarely drove it.”
Toyota said the late Mr. Shafton still owed $27,470.68 on his three-year contract, but the company earned $23,800 selling it at auction. So, once all applicable refunds and fees were factored in, it said, Toyota was due $2,352.72.
Shafton told me she called the company and explained, again, her husband died.
A service rep pointed her toward the part of her deceased husband’s lease agreement involving “early termination.” It specified “you may have to pay a substantial charge if you end this lease early.”
Shafton replied she understood the provision.
“It’s there for people who are irresponsible with their leases,” she said. “But death is something different.”
Be that as it may, the rep answered, someone has to pay. And in this case, that someone was Bob Shafton’s estate.
This position was reiterated the other day when Shafton received a letter from the law firm of Weltman, Weinberg &Reis, which was retained by Toyota to get its dead customer’s money.
The letter made clear Shafton herself wasn’t liable for the debt. After all, she hadn’t co-signed the lease.
But it said Weltman, Weinberg &Reis is determined — and legally entitled — to collect the cash from her husband’s estate.
This was small comfort to Shafton, who shared all financial accounts and activities with her husband during their 60 years of marriage.
“The estate is me,” she said. “Everything in the estate has gone to me.”
And that’s what makes this whole thing so infuriating.
A multibillion-dollar corporation wants its pound of flesh from the elderly widow of a former customer, and it appears determined to get its $2,352.72 at all costs, including the hiring of a law firm described by Collections &Credit Risk magazine as “the largest creditors’ rights firm in the country.”
The firm says on its website it approaches its work “with enthusiasm and intensity.”
“This is something that, unfortunately, comes up with leases,” said Justin Leach, a spokesman for Toyota Financial Services. “It’s a tough one, and it’s sad.”
But it’s not something Toyota is willing to walk away from.
“With each early termination of the contract, certain fees apply,” Leach said. “It’s a legitimate claim based on the contract.”
True. And I get it.
Creditors need to protect themselves from people who don’t pay their bills. They’re also entitled to restitution in the event of a borrower’s death.
But let’s think about this a moment. Could Toyota have handled the situation in a more humane fashion?
For instance, why did the company have to put the Prius up for auction, which meant Toyota Financial Services received only a wholesale price from a dealer?
Perhaps in situations involving a death, the lender could skip the auction and let the Toyota dealer that leased the car offer the vehicle directly to the public from its own lot.
This might be a bit more time-consuming, but it would almost certainly bring in a higher price, which could be used to offset the hit on the deceased customer’s estate.
And did the company really need to pound Shafton with all those ridiculous fees? If Toyota had to dispatch repo men in the dead of night to snatch a vehicle from a deadbeat borrower, that’s one thing.
I mean, $225 just to send someone in response to Shafton’s own call to pick up the car? Really?
It reminds me of how airlines pile on the fees when people need to travel for family emergencies.
There are times when it wouldn’t hurt for companies to behave like the “corporate persons” they profess to be — and fought all the way to the U.S. Supreme Court to stake such a claim — and not profit-hungry, sociopathic capitalists.
I know, I know: A deal’s a deal. Bob Shafton, who was 83 when he died, should have understood the terms of the lease agreement, even though his wife said a Toyota salesman told him not to worry.
But I agree with Shafton there’s a difference between playing fast and loose on lease payments and dying. One situation seems to merit greater flexibility on a creditor’s part than the other.
“We certainly feel for her and her family,” Leach said. “I wish the system was different. But it is what it is.”
It’s not. It is what Toyota says it is.
Unlike Shafton, the company is not a victim of circumstance.
David Lazarus, a Los Angeles Times columnist, writes on consumer issues. He can be reached at email@example.com.
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