Most leasing companies allow a grace period of 10 to 15 days after your due date, but the exact number depends on your lease agreement
Your lease contract spells out the due date and what happens if you miss it. Many leasing companies build in a grace period — usually 10 to 15 days — where you can pay without penalty. After that window closes, late fees start. The amount varies: some charge a flat fee (often $25 to $50), while others charge a percentage of your monthly payment. Read your lease documents to find the exact grace period and fee structure for your lease.
The grace period is not the same as a important date to avoid trouble. It is the window where you can pay late without extra charges. Once you pass it, the leasing company reports the late payment to credit bureaus, which can hurt your credit score. If you are going to be late, contact your leasing company as soon as you know — some will work with you on timing or payment plans if you reach out before the grace period ends.
Key Takeaways
- Your lease agreement states your grace period, typically 10 to 15 days after the due date, during which you can pay without penalty.
- Late fees begin after the grace period ends and are reported to credit bureaus, affecting your credit score even if you eventually pay.
- Contacting your leasing company before you miss a payment gives you the best chance of working out a solution or payment arrangement.
- Repeated late payments can lead to lease termination, and you may owe early termination fees plus remaining lease payments.
- If you fall behind by 60 days or more, the leasing company may repossess the vehicle without further notice.
What happens after the grace period ends
Once the grace period passes, late fees kick in when ready. The leasing company also reports the late payment to the three major credit bureaus — Equifax, Experian, and TransUnion — which stays on your credit report for seven years. Even one late payment can lower your credit score by 50 to 100 points, depending on your current score and credit history.
The leasing company may also send you a written notice demanding payment. This notice usually gives you a set number of days (often 10 to 30) to pay the full amount owed, including the late fee. If you pay during this window, the account goes back to current status, though the late payment itself remains on your credit report.
How many missed payments before the lease is at risk
Most leasing companies will not when ready terminate your lease after one late payment, but repeated lateness is a different story. If you miss two or three consecutive payments, the leasing company typically sends a formal notice of default — a legal document stating that you have breached the lease agreement. This notice usually gives you 10 to 30 days to bring the account current.
If you do not pay within that window, the leasing company can terminate the lease and repossess the vehicle. Repossession can happen without warning once you are 60 days or more behind. When the vehicle is repossessed, you still owe the remaining lease payments, any accumulated late fees, repossession costs, and sometimes an early termination fee. These charges can add up to thousands of dollars.
What "current" means and how to get back there
Being current means you have paid all amounts owed up to and including the current month's payment, plus any late fees that have accrued. If you are one month behind, you owe that month's payment plus the current month's payment plus any late fees. If you are two months behind, you owe all three months plus fees.
To bring the account current, you must pay the full amount owed, not just the current month's payment. Some leasing companies will set up a payment plan to spread the catch-up amount over a few months, but you have to ask. The sooner you contact them, the more options you may have. Once you are current, your next payment is due on the regular schedule.
How to contact your leasing company if you know you will be late
Call the leasing company's customer service number — it is on your lease documents and on your monthly statement — as soon as you know you cannot make the payment on time. Do not wait until after the due date. Explain your situation and ask what options are available. Some companies offer a one-time payment deferment (pushing your payment to the next month), a short-term payment plan, or a temporary reduction in the monthly amount.
Get the name of the person you speak with and any agreement in writing, either by email or by asking them to mail you a confirmation. If the company offers a deferment or plan, follow it exactly. Missing a payment under an agreed plan can trigger when ready termination.
The difference between a late payment and a missed payment
A late payment is one that arrives after the due date but before the end of the grace period. It may trigger a late fee, but it does not go on your credit report as a missed payment. A missed payment is one that does not arrive by the end of the grace period. Missed payments are reported to credit bureaus and carry more serious consequences.
If you are in the grace period, paying now stops the situation from becoming a missed payment. Once the grace period ends, the distinction no longer matters — both late and missed payments are reported the same way.
What happens to your credit if you are late
A single late payment reported to credit bureaus can lower your score by 50 to 100 points, depending on how good your score was before. The impact is largest in the first few months after the late payment is reported. After six months, the damage usually begins to fade, though the late payment stays on your report for seven years.
Multiple late payments or a missed payment that leads to default or repossession will hurt your score much more severely and for longer. If you are trying to rebuild credit, even one late payment sets you back. This is why contacting the leasing company before you miss a payment is so important — it may be your only chance to avoid the credit damage.
Frequently Asked Questions
Can the leasing company repossess my car without warning?
Yes, once you are 60 days or more behind, most leasing companies can repossess the vehicle without notice. Some states require a written notice first, but the notice period is usually short — 10 to 30 days. Check your lease agreement and your state's laws to know what applies to you.
If I pay the late fee, does the late payment disappear from my credit report?
No. Paying the late fee stops further penalties, but the late payment itself stays on your credit report for seven years. Paying it does not erase it, though it does show future lenders that you eventually paid.
What if I cannot afford the full catch-up amount?
Contact the leasing company and explain your situation. Some will set up a payment plan to spread the amount over two to four months. Others may offer a one-time deferment. The key is asking before you fall further behind — the longer you wait, the fewer options you have.
Does a late payment on my lease hurt my credit the same way a late payment on a loan does?
Yes. Credit bureaus treat lease payments the same as loan payments. A 30-day late payment on a lease damages your score the same way a 30-day late payment on a car loan or credit card does.
Can I refinance my lease if I have been late?
No. Leases cannot be refinanced. If you are struggling with payments, your only options are to contact the leasing company about a payment plan or to end the lease early (though early termination usually comes with significant fees).