Lease end. Settlement vs Paid in full? (Update)

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1

Hello everyone. I tried doing a search for this but cannot see anything that talks about this question directly.

I had a Alfa Romeo Giulia lease, picked it up October 2018. Returned it early in May 2020. Paid the 5 months in remaining payments in full. (Two year lease)

Now the statement came in for overmileage. I had an allowance of 30k, I did 37k.

The lady at Ally financial said I owe the full amount of $1617, but can settle for $1200. She scared me off by saying it will be reported to the credit bureaus as “Settled less than full amount” vs. “Paid in full”.

The reason I asked is because I lost my job due to corona virus and I’m on a limited income, but my question is, is what she is saying is true? Will it be reported? Will this damage my credit?

It seems as if lease end discussion isn’t really prevalent online.

Update: I’d just like to provide an update. I paid the amount in full.

My FICO score dropped 15 points once it was reported. It was reported “paid satisfactorily” and everything looks fine. Not sure why that happened.

2

Hell yea man. My Fiat 500 disposition of $395 was not paid, they called my job many times over that due amount. Like hawks.

3

They’re surprisingly not even asking me for the disposition fee. Just the over mileage. Vehicle had almost no wear or tear.

4

I settled my BMW lease end fee and I did not see issues with my credit score. I think its about not paying the discussed amount, and Ally giving your due amount to collection agency. Because once you settle for an agreed amount, pay it, your account is satisfied with the bank.

5

I don’t think Ally has a disposition fee at the end of lease for Alfas

6

So you’re saying if I just pay the $1200 it’s considered settled with Ally and not a 3rd party collection agency?

7

I could’ve swore the contract said $395 but too lazy to go find it.

8

That’s my experience with Ally and BMW Financials. Pay the settle amount and never lease another Daimler/FiAT product.

9

Ok will do. And I agree, I hate Ally, and I hate FCA. Never again.

3 Likes
10

I dont understand when you say she says I owe the full amount?Do you mean the amount for over mileage?Did they hit you with excess wear and tear?I had a similiar thing happen with me they said I owed $1700 wear and tear on my car at the end of my lease.I wound up settling for like $1200 and yes it did show up as "settled " on my report.How much of a ding do it do? Im not sure but shows up as a negative on my reports now.

11

I would be careful, if it reports settled that might score similarly to a paid charge off\default.

12

Settled for less amount will show on your credit report and might scare lenders and effect your credit. Will stay on your credit 7 years. You went over miles and signed a contract stating you would drive x amount of months and put x amount of miles. You are liable for any excess miles you accured

13

There may be other legitimate reasons to hate them, but requiring you to pay what you agreed in the contract you signed isn’t one of them.

Neither is accurately reporting the specifics of your breach of contract to the credit bureaus.

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14

The amount I owe of $1617 is strictly for over mileage, the car had zero wear and tear other than things out of my control.

15

I never said the reason I hate them is because they’re asking me to pay what I owe. I understand there was an agreement/contract.

But thank you for stating the obvious.

16

Yes I understand that, I thought about it and will just pay the full amount. The reason I asked is because I always hear people saying they get away with not paying, or they just pay a fraction of what they owe and there’s no negative affects. Basically the lender discounting what they owe, but not reporting it negatively.

17

You may have understood that there was a contract, but you misunderstood that you had to actually uphold your end of the terms, and that there were consequences if you didn’t.

I don’t fault you for asking the questions (in fact, I commend it), but this is basically the premise you were challenging.

I addressed this.

2 Likes
18

I wouldnt mess up my credit over $417. Everyone’s situation is different if you can negotiate a less amount and have it show paid in full I would go that route. You can try to haggle due to covid19 its worth a shot you have nothing else to lose

1 Like
19

That’s exactly what my aim was. To have them at least try to discount it to something we’re both happy with while still showing paid in full.

If not then it’s fine I’ll pay the full amount. Will be calling them again today.

20

How badly does this affect a FICO score and how long does the effect last?