All good things must come to an end. And at some point you will have to return your lease car. But, what actually happens when your lease car is due to go back?
You might currently be approaching the end of your lease contract or you may just be curious as to what happens when the time comes to return your lease car. Either way, it’s important to know the process so you can be fully informed for when the time comes.
So, in this article we’re going to cover what happens at the end of your lease contract including the inspection and whether you can extend your lease contract.
What happens when I return my contract hire car?
If you have a contract hire, that is when you return the car after your contract is up, then one of two things will happen. It varies depending on which finance house you go through. So it’s best to check before your contract ends so you know how it all works.
Depending on the finance house, you will either be contacted, or you will have to contact them. They could contact you and arrange for your car to be collected. Or they will leave it up to you. Of course, you will still carry on paying and racking up the miles while they wait for you. So best to make sure you know when your lease car is expected to go back.
Your finance house may have connections with auction houses. It will be the auction house that picks the car up and appraises it, as well as inspects it for any damage (we’ll go into more detail about this below). Your car will then be taken to the auction house and sold.
Or, your finance house will have connections with national dealer groups. These national groups host internal auctions for dealerships only. Your car will be auctioned off before the contract comes to an end. Whoever wins the car will be the one to pick it up when it needs to go back. You won’t get anyone knocking on your door before they are supposed to so don’t worry.
What happens when I return my contract purchase car?
- Hand the car back
- Part-exchange the vehicle
- Pay the Minimum Guaranteed Future Value and own the car
Obviously in this article we are talking about returning your lease car. So, when it comes to the end of the contract you notify the finance house (or they notify you) what option you are going to choose. If you are handing the car back, then you will go through the same process as if it were a contract hire.
What happens when I return my finance lease vehicle?
If you have a finance lease, then things are slightly different. 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 that buyer to the finance house. They will then buy the vehicle.
The money from this transaction should cover your final payment. If the vehicle goes for less, then you will have to top up the amount yourself. However, if it goes for more then you get to keep the equity.
What happens when my car is inspected?
When you have a lease car, the vehicle will have to undergo an inspection before it is returned. This is to check for any damage that constitutes outside of fair wear and tear. The inspector will use something called the BVRlA Fair Wear and Tear Guide. This is the industry standard for all lease cars that are due to be returned.
Depending on your finance house depends on when you will have an inspection. Some finance houses will send someone a week before your car is due to go back. Others will inspect it the day it goes back.
Honestly, you would rather the former, as this means that they will tell you if there is any damage that could be chargeable. You then have a week to get it fixed before it goes back. Unfortunately, if your vehicle is inspected on the day of collection and there is chargeable damage, you will simply have to pay when the finance house invoice you.
We do recommend that you get damage fixed before it goes back as you are able to shop around for the best repair deal. The finance house won’t take money into consideration when they send to get it fixed. This means you could end up paying more.
What happens if I get charged for damage on my lease car?
If you do get charged for damage then you will be sent an invoice in the post shortly after your car has been returned. Which you will then have to pay.
However, if you want to contest your charge as you think that the ‘damage’ was inside the fair wear and tear guidelines, then you can. You can, if you wish, take it to the BVRLA themselves who will help resolve this issue. Their word is final.
Before your inspection, we do recommend that you take photos of your vehicle (make sure they have a time and date stamp). Just in case you do want to dispute any damage claims.
When it comes to making sure your car is in top shape for when it comes to collection, we always recommend looking at your car as if you were going to buy it. If there are things you would pick up on as a customer, get them fixed. It could save you money in the long run. You can read more about avoiding damage charges on your lease car here.
Can I extend my lease contract?
There is a chance, depending on the finance house, that you may be able to extend your lease contract. However, it is not guaranteed. Some finance houses will allow you no problem and others will not. They could also allow you to extend it but at a different price.
One of the most common reasons why people want to extend their lease contracts is because they have a new car being delivered a short while after their current lease car goes back. If you have a factory order car, then the delivery date can change at a moments notice. This could push it back to after your current car goes back. You can read about delivery times here.
Another reason people extend their lease contracts is because they aren’t quite ready to part with their car just yet. While we understand this, if you do extend your lease contract you do run the risk of it falling outside of warranty and you could end up paying for its MOT. However, it is your choice.
Generally you can extend your lease contract for anything up to twelve months but it’s up to the lease company. Some will have a maximum term and others will negotiate based on your personal situation. All in all, it depends which finance house you go through.
An alternative to extending your lease contract is a short term rental. This is great for those who are unable to extend their lease contract but need a car while they are waiting for their new car to be delivered. You can have a short term rental for up to twelve months and it costs significantly less than traditional daily rentals.
In conclusion, when you return your lease car you will either have to arrange it with the finance house yourself or they will contact you. Your car will undergo an inspection (if it’s a contract hire or contract purchase) and if there is any damage, you will be invoiced for the damage shortly after your car has been returned. You can dispute this, however. It is also possible to extend your lease contract if your finance house allows it. Which means you will not be without a car if your new car is taking longer than expected to be delivered. You can read about why your lease car might be delayed here.
- 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