What Happens At The End Of A Car Lease

What Happens At The End Of A Car Lease

Leasing remains a popular financing method for driving a new car, with around 30% of new cars on the roads in the UK being on lease. If you’re thinking of getting a car on a lease, make sure you’re fully informed on what happens when the lease term comes to an end.  

To avoid incurring unexpected fees and costs, we’ll be discussing everything from what your options are at the end of a lease, what you need to do when returning your car and what to do if you don’t want to hand the car back. 

What is Car Leasing 

Leasing, often referred to as PCH or personal contract hire, is a long-term hire plan, usually only offered on new cars. It offers a reasonably cheap way to run a new car, with less hassle than buying and selling every three years.  

Leases are typically offered between 3-5 years, and as standard don't include the option to buy the car built in.  

What Can You Do At The End Of A Car Lease 

After you have driven and enjoyed your car for the 3-5-year lease period, there are a few steps you need to take to end the lease, these vary depending on the lease provider so make sure to check with your leasing company in plenty of time. 

However, you might be surprised to hear that handing the car back isn’t your only option come the end of your lease period, many leasing companies will allow you to extend your lease period or even buy the car from them. 

How to Return a Lease Car 

When it comes to knowing what to do and how to return a leased car, the option most people take is to simply hand the car back as agreed. This allows you to source a different car, via lease, finance, or purchasing. This option is the best if you want to change your car for something different. 

When returning a lease car there are often checks made by the finance company for damage, mileage etc. We discuss these in more detail later in this blog. 

Returning Lease Car Checklist 

  • Read the BVRLA Fair Wear and Tear Guide - a copy should be available through your lease provider 
  • Remove all your personal belongings 
  • Clean the car thoroughly 
  • Inspect the car exterior for dents, scratches, and scuffs. Repair or have repaired any that would not be considered fair wear and tear 
  • Inspect the interior for scuffs, rips, and marks on the upholstery 
  • Book the car for its end-of-lease inspection 
  • Arrange the collection of the car with the leasing company 

What is Acceptable Damage for a Lease Car? 

The BVRLA sets out the guidelines for what is and is not acceptable “wear and tear” for a car on a lease or finance agreement. This document will be available through your lease provider, if not you may have to purchase it on the BVRLA website

Exterior Condition 

Small scuffs and scratches are acceptable, as long as they are under 25mm. The amount and extent of the damage should be in line with the age and mileage of the car, e.g. an old car with 100,000+ miles can have more damage than a newer model. 

Any trim or mouldings should be intact and not damaged, as should any wheel trims. Alloys are also only permitted to have scuffs under 25mm, but no serious curbing or damage.  

Tyres should have more than the legal limit of tread depth, and no tears, or rips of damage to the sidewalls.  

Interior Condition 

Seats and upholstery should be free of any major tears or rips, with only minor scuffs permissible. Any trim such as around the armrests, glove box etc should be free of scuffs.  

Minor scuffs to the steering wheel and gear knob are considered reasonable, depending on the age and mileage of the vehicle. 

Mechanical Condition 

The car should run and drive as it did when new, there should be no noticeable clunks, noises, or defects from the suspension, brakes, or steering. Again, any minor defects the car does have should be appropriate to its age, although it should be able to pass an MOT test at the time of handing back. 

Have your car repaired with one of Bumper’s approved partners, and pay monthly with zero-percent interest financing 

Schedule End Of Lease Inspection 

All lease terms include an inspection near the end of the leasing period, this is to make sure the car is in good working order, without any damage other than those listed above. If the car is deemed to have defects larger than wear and tear, you may be charged a fee. 

The fee schedule will be outlined in the lease documents, so make sure to do a thorough checkover of the car before booking an inspection, to save having to pay higher fees through the lease company.  

Most leasing companies will contact you within one to two months of your lease ending to book the inspection, so three to four months from the end of the lease is a good time to start inspecting the car. 

Arrange Collection Of Car 

After the inspection has been completed, the car will need to be collected. You may need to budget some time off work for this, as you will need to be present. Collections are generally arranged up to 10 days beforehand.  

Can You Extend The Lease On Car? 

Yes, even if you agreed to a set period when starting your lease, most providers will allow this to be extended if you contact them before the lease is due to end. 

In some cases extending the lease period can reduce your monthly payments, so make sure to get in touch with your lease provider as soon as you can. 

This may be a good option for those that enjoy the car they have, and don’t want to have to exchange it for a new one. Look into the costs closely though, as new lease deals may be available that mean you can get a brand new car for the same amount as your extension costs per month. 

Can You Buy Your Car At The End Of A Lease? 

Some lease companies offer the option to buy the car outright. This can avoid the hassle of having to find and buy an unknown vehicle, as well as arranging for the lease car to be collected.  

The lease company will still want to do an inspection of the car, though. Buying the car is not likely to save you any costs you might expect to incur due to unrepaired damage. In fact, the lease company will probably charge you for this, and then still demand top money for the sale of the car.  

If you are yet to take out a lease, but think that buying a car at the end sounds like something you may want to do, then PCH (personal contract hire) may be a better option for you.  

Should You Buy Your Lease Car? 

If you do want to buy your lease car when the term comes to an end, there are some pros and cons to consider before buying. 

When buying any car, there are always risks involved, these mainly revolve around how the previous owner/driver has kept it, fortunately, you know the previous driver! Assuming you have looked after the car and had it maintained properly, it is less of a risk than buying an unknown car from a dealer forecourt.  

However, some lease providers don’t want the hassle of selling a car to a member of the public, many simply auction off their old stock when the leases expire, as this doesn’t come with nearly as many consumer rights considerations.  

This means they may well want higher than market value to sell it to you, so make sure to check for comparable prices online before committing to buy.  

How to Save Money When Ending a Car Lease 

Now we’ve discussed the multiple options available to you when ending a car lease agreement, you may be thinking about which is the best decision for you financially. This depends on the individual circumstances, but we’ve put together some examples and our advice below. 

Can You Return A Damaged Lease Car?

In this instance, your lease provider may well charge more than the going rate for repairs or touch-ups, so to save yourself some money, we would advise getting the car repaired by a professional before booking your end-of-lease inspection.  

You should read through your lease agreement, as some lenders require their car be repaired at an approved garage, otherwise, you may end up responsible for #

even more remedial costs if the repair isn’t up to scratch. 

Can You Extend A Lease And Keep Same Car? 

Speak to the finance company as soon as possible. Longer leases usually mean lower monthly payments. As such if you let them know well before the end of the term, they may be able to reduce your remaining monthly payments.  

Can You Get A Loan To Buy Your Leased Car?  

If you’re dead set on retaining ownership of your lease car, you may be able to buy it back, but even at three to five years old it will set you back a pretty penny. You could look into other methods of financing such as a bank loan, or even opt to extend the lease agreement allowing you to save up more cash to buy outright. 

Before committing to anything, speak to the lease provider to see how much they would charge for the car, compare this to other cars for sale using a site such as AutoTrader, inputting the mileage, damage, and age.  

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