Returning a leased car: what to expect
Handing your car back at the end of a leasing contract is easy but could land you an unexpected penalty charge. We share how you can prepare for it...
One of the most significant differences between different types of finance agreements is what happens when a contract ends. While personal contract purchase (PCP) and hire purchase (HP) agreements give you the option to make a final payment to own the car, with a leasing deal, you must give the car back once your contract is up.
While the precise process involved varies between leasing companies, returning a leased car is generally very easy to do. Nevertheless, by understanding what you’ll need to do, you can save yourself headaches and potentially expensive penalty charges.
Here, we share what will happen when your leasing contract ends and how you can prepare your car if it features any damage that goes beyond wear and tear.
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What will happen when my contract is about to end?
A few months before your contract is due to end, it’s likely that the lender will contact you in order to discuss what you’d like to do afterwards. It’s likely that you’ll be given the option of signing up to another contract, but you can also arrange to hand the car back and walk away.
In either case, the leasing company will need to arrange a date to inspect the condition of the car and collect it. It’s a good idea to organise this date as soon as possible to make sure you can agree on a time and location – usually your home or place of work. If you’re taking out another leasing contract, it might be possible to have your existing car collected and the new one delivered at the same time – preventing the hassle of being left without a vehicle.
When they collect the car, the finance company will want any relevant documents, such as the service history. It’s unlikely that you’ll have the V5 registration document if you’ve been leasing the car, because the leasing firm is the registered keeper. Nevertheless, if you have got it, you’ll certainly need to hand that back as well.
What is an end-of-lease inspection?
Before your lease car is returned, the finance company will inspect it to assess the general condition and check for any damage. Vehicle inspectors will use the Fair Wear and Tear Guide issued by the British Vehicle Rental and Leasing Association (BVRLA), which gives a clear insight into what is and isn’t considered a reasonable amount of damage on a vehicle leased for a certain period of time.
If the car is in good condition and has nothing more than very minor wear and tear – the type expected of a vehicle of its age – you shouldn’t receive any charges at all. Nevertheless, you will be charged for more serious damage that has been caused, which will be based on the cost of getting it repaired.
You could be penalised if you return a lease car with…
- Dents with a diameter of over 15mm or on the roof
- Paint chips larger than 3mm or within dents
- Side body panels with over four paint chips (increasing to eight for front panels)
- Rust or corrosion on a painted area
- Scratches that are over 25mm or expose the primer/bare metal
- Windscreen scratches of over 10mm in the driver’s line of vision (40mm in the area swept by the wipers)
- Wheel scuffs of up to 50mm
- Tyres that fail to meet the minimum legal requirements
- Tears or burns in the interior upholstery
If you think that the finance company has unfairly charged you for damage, you have the right to pay for an independent qualified engineer to examine the vehicle. If there’s still a dispute, you can refer the case to the BVRLA’s Alternative Dispute Resolution Service.
Can I repair my lease car?
While you’re able to return a damaged car at the end of your lease – paying the finance company for any repairs that need to be done – it’s usually cheaper to get the car fixed yourself. Smart paint repairs can be cost-effective, and there are specialists who will repair damaged wheels or rips and tears to the interior trim.
Nevertheless, it’s important to make sure that you’re able to get repair work conducted on the car. Before booking a professional, check the wording of your lease agreement to see whether there are any requirements for main dealers to complete the work. If you’re in any doubt, it’s best to speak to the leasing company.
What are excess-mileage charges?
The exact mileage you’re able to cover without incurring additional charges will have been agreed at the start of the contract. If you’ve exceeded this amount, you’ll be charged a penalty by the leasing company. This fee is typically charged on a per-mile basis, with the exact charge being detailed in your contract.
The amount you’ll have to pay can quickly add up, particularly if you’ve significantly gone over the mileage limit. As a result, it’s always a good idea to contact the finance company and request an amendment to the leasing contract. Even so, increasing your mileage will cause your monthly payments to rise.
Can I extend my lease contract?
If you’d like to continue driving your current car, it might be possible to extend your lease contract. In most cases, leasing contracts only last for two or three years, but some companies offer agreements of up to five years.
To inquire about increasing your contract, speak to your finance company as soon as possible. Some will be more flexible about extensions than others, but the earlier you contact them about it, the better your chances.
How can I get out of my car lease?
Some forms of car finance let you hand the car back early, but leasing isn’t one of them. If you want to cancel the contract before it’s due to expire, you’ll have to pay off the remaining amount in full – even if you have years left.
If you’re struggling to afford the payments, it’s best to contact the finance company as soon as possible. They might be able to implement measures to reduce the financial impact of leasing, such as extending the length of the contract or trading you down to a cheaper model.
No matter whether you end your car lease early or on time, you won’t be able to get any of your money back.
