What happens at the end of my lease contract?
You might be approaching the end of your lease contract, or perhaps your just curious as to what happens when the time comes to hand the car back. What does happen at the end of a lease contract?
We go through this a lot at OSV, and we want you to be informed about every step of your leasing journey, including the end of it. So, in this article, we’re going to look at the process at the end of each contract.
What happens at the end of a Contract Hire?
If you’re approaching the end of your contract hire, then one of two things will happen. It differs between finance houses, so we can’t say for sure which process your finance house has in place.
Depending on your finance house, they will either contact you towards the end of your contract to arrange collection, or they will wait for you. So, it’s good to keep track of exactly when your lease car is expected to go back.[vc_column width=”1/3″][vc_single_image image=”44677″ img_size=”article-image”]Some finance houses have connections with auction houses. The auction house will pick the car up and appraise it. They will also be the ones to inspect the car for any damage. If they think there is any damage then they will inform the finance house (we’ll talk more about the inspection later). Your car will be taken to the auction house and sold.
Alternatively, your finance house will have deals with national dealer groups. These groups will have internal auctions exclusively for dealerships. The car will be auctioned off just before the contract will end. The dealerships will bid for the car and then whoever wins will be the one who has to pick the car up.
What happens at the end of a Finance Lease?
At the end of your finance lease, you will have the option to extend your contract for a year.
This will involve something called a peppercorn rental, which is usually the price of one monthly payment.[vc_column width=”1/4″][vc_single_image image=”44676″ img_size=”article-image”][vc_column width=”3/4″]Once your contract is over, you are responsible for finding a third party to buy the vehicle. Once you find a buyer you will introduce them to the finance house, where they will buy the vehicle off the finance house. The money for this will cover your final payment. Of course, if the vehicle goes for less than your final payment then you will have to top up the amount yourself. On the flip side, if it goes for more, then you get the equity.
Can I extend my lease contract?
There is a chance that you may be able to extend your lease contract and the ways you can do this vary.
If your car is going back but you are waiting for another car to be delivered, then the finance house may let you continue your lease on an informal basis. This is where you essentially keep making the monthly payments until your new car is delivered. However, some will want this to happen on a more formal basis.If you want to extend your lease simply by a few weeks or so, then you can delay the collection of your old car. This is done by telling the finance house that it is not ready for collection. If you want to extend it by more than this, then you will have to negotiate with the finance house how long you are going to keep the car for. However, there is no guarantee that the finance house will agree to this, it’s completely at their discretion. For more information, you can read our article here.[vc_column width=”1/3″][vc_single_image image=”44678″ img_size=”article-image”]
How long can I extend my lease contract for?
Generally, you can extend your lease contract for up to 12 months. But, it’s really down to the discretion of the lease company. Some funders will have a maximum term you can extend the lease for, whereas others it will be down to your personal circumstances.
Are the monthly payments the same?
If you are extending your lease for a shorter period of time (3 months or less), if you are waiting for your new car for example, then the payments will normally stay the same.
If you are extending it for a longer period of time then you may be able to negotiate a different monthly price with the leasing company. However, the finance house may adjust your monthly payments, and the chances are this will normally be upwards.
When will my car be inspected?
[vc_column width=”1/4″][vc_single_image image=”44679″ img_size=”article-image”][vc_column width=”3/4″]At the end of your lease contract, your car will undergo an inspection. This is to ensure that you have kept the car in good condition. This will be in line with the BVRLA Fair Wear and Tear Guide, of which you should be given a copy of at the start of your lease contract.
Your car will be inspected either a week before collection, or the day of, depending on your finance house’s process. The inspector will be checking your car for anything that constitutes as outside of the Fair Wear and Tear Guidelines.If your inspection is a week before then you are at a distinct advantage. If the inspector does spot anything then they will notify you. This means that you can get it fixed before your car is returned. This is a benefit because you can find the best deal to get your car fixed. If your car is inspected on the day of collection, then you will receive an invoice for the damage shortly after the car has gone back. Unfortunately, the finance house isn’t going to be as frugal, and will simply get it fixed regardless of the cost.
What happens if I am charged for damage?
As I mentioned, you’ll receive an invoice for the damage shortly after the vehicle has returned. If you think you have been unfairly charged, you can dispute it. You can also get the BVRLA involved to help settle the dispute, and their decision is final.
Before your car is returned, I recommend inspecting your car yourself while referring to the BVRLA Fair Wear and Tear Guide. If there is anything you are unsure about, it would be advisable to get it fixed before you return the car. Otherwise, you may end up paying more than you have to. What we do recommend is taking photos of the car before its return, and make sure these have a date and time stamp. Just in case. [vc_column width=”1/3″][vc_single_image image=”44681″ img_size=”article-image”]You can read everything you need to know about avoiding damage charges when leasing a car here.