How a PCS Impacts Auto Loans and Leases
If you’re not in the military, you might not realize that “PCS” is shorthand for permanent change of station. One of our Casey finance centers should be your destination if you receive a PCS because the notice can affect your car loan or lease. Luckily, contacting Casey Auto is all you need to do to learn how to address this common situation.
Servicemembers Civil Relief Act
Although the Servicemembers Civil Relief Act was enacted in 2003, its origins date back to the 1940s. The purpose of the legislation is to limit the financial burdens servicemen and women bear, considering how much they’ve given and continue to give to their country and fellow citizens. With that in mind, the SCRA offers certain protections for military members, depending on where their orders take them. Let’s look at some common scenarios and how to deal with each.
Dealing With Your Car Loan
There are fewer protections for financed (not leased) vehicles. However, the SCRA offers protections against repossession and default remedies. If a service member bought a car and financed it before entering active duty, the lender cannot repossess the vehicle without a court order during the period of active duty. If the borrower is on active duty and defaults, the lender must first get court approval to repossess.
The court may delay the repossession, adjust the payment terms, or order the service member to return the vehicle. Auto loans qualify for the 6% interest rate cap under SCRA for debts incurred before active duty, and any interest above that cap must be forgiven rather than deferred. Another option is to sell your vehicle to a Casey dealership or privately.
SCRA Auto Lease Protections
The SCRA allows service members to terminate a vehicle lease without penalty under specific conditions. If a lease was entered into before active duty began, and the service member is later called to active duty for 180 days or more, they may terminate the lease. Similarly, if a lease was entered into during active duty and the service member later receives deployment orders for 180 or more days, or PCS orders to a location outside the Continental U.S. (such as Alaska, Hawaii, or overseas), they may terminate the lease.
To do so, the service member must provide written notice of termination to the lessor and return the vehicle within 15 days of the notice. Transfers within CONUS (the lower 48 states) do not qualify a service member to terminate a lease without penalty. In contrast, OCONUS transfers or deployments qualify if they meet the duration and duty location requirements. Furthermore, no early termination fees or penalties are allowed when a lease is lawfully terminated under SCRA.
Know Your Rights And Responsibilities. Your Casey Dealership Can Help.
You can count on the pros at our dealerships to help you handle a PCS right from the start. After all, part of the Casey Carefree Guarantee is our promise to support you throughout your ownership experience. Contact or visit one of our Newport News, VA, car dealerships to learn more today.