As you’re approaching the end of your lease contract, you may start to wonder whether you can have your lease car for that little bit longer.
You may be given the chance to extend your lease, but is it a good idea? We look at whether you can extend your lease, how much it will cost, and whether it’s a good idea.
Can I extend my lease contract?
Possibly. It’s down to the finance house whether they allow you to extend your lease contract. They could allow you to extend it no problem, or they could turn around and tell you they can’t. It’s not guaranteed. Alternatively, they could say you can extend it but at a different price.
But it is worth asking as your contract draws to a close.
Why should I extend my lease contract?
Extending your lease is a good idea if you are waiting for your new car to be delivered. So, if you have to hand your car back but you don’t have a new car coming for another three/four months, then you might want to consider extending your contract.
It’s probably the easiest way to ensure that you are not without transportation during that period.
It’s also a good idea if you aren’t quite ready to part with your car yet. It’s a great way to spend that little bit longer with your car without having to spend money on another initial rental.
Why shouldn’t I extend my lease contract?
There will be times when it’s not advisable to extend your car lease, and there are things that you should be aware of before you decide whether it’s the best idea for you.
When you extend your lease you do run the risk of being eligible for repair costs for the vehicle. This is if your car goes outside of the warranty during your extended contract. Some repairs when a car gets older can be costly. So, it’s worth taking this into consideration, and it’s also worth taking this into account when you look at your monthly budget. You don’t want to get caught out with an additional repair cost at the end of the month.
You may also find that your car becomes increasingly unreliable. This is because the older the car gets and the higher the mileage, the more you risk having problems with the car. This, in turn, could mean you end up without transportation. Also, your car may not have recovery anymore, and you may have to pay for its MOT. If you extend your lease contract you may end up having to fork out for new tyres, and depending on which car this is, could cost you upwards of £450.
Also, there is chance that your monthly rentals could go up. The finance company will work out how much your monthly rentals will be by working out the current depreciation costs of the car. They, or we, can’t guarantee that the monthlies will be the same. They may increase the price because the car is depreciating, and therefore they are losing money.
Who should extend their lease contract?
As I mentioned earlier, it’s also a viable option for those who are simply waiting for their car to be delivered. The chances are that if you are extending your lease contract by a few months that the price won’t change that much. If you are extending it for only a few months then the finance house may allow you to extend it on an informal basis until your new car arrives.
Others, or for longer than a few months, may require you to formally extend your contract. This is when you negotiate when you are going to hand the car back.
How long can I extend my lease contract for?
Generally, you can extend your contract for anything up to twelve months. This is, however, at the discretion of the lease company. Some will have a maximum term you can extend the lease for, but others would negotiate based on personal circumstance. Usually, though, it’s between 6-12 months.
What is the alternative to extending your lease contract?
Of course, if you cannot extend your lease contract then what are your options?
If you need a car for a short period of time while waiting for your new car then you might want to consider a short-term lease.
A short term lease is where you can lease a car for 3-12 months. It costs significantly less than the traditional daily rentals and is a great solution if you cannot extend your lease but also cannot be without transportation.
Ultimately, extending your lease contract is a viable option for those who are waiting longer for their new car, or don’t want to get a new lease contract just yet. However, there is a chance that you will not be able to extend your lease and even if you are able to, your monthly rentals might go up. Alternatively, you may want to consider a short-term rental.
- Benefits of business car leasing - 13th April 2021
- Things businesses should consider before hiring a Fleet Manager - 12th April 2021
- Tax benefits and implications of business car leasing - 8th April 2021