We’ve written previously about how the pandemic and crisis in Ukraine have affected the supply of new vehicles, so it’s little surprise that we’re seeing more customers looking to keep their current lease car for a little longer until their new one is ready. So, we’ve put together this article to help you understand all there is to know about lease extensions and why you might choose to keep your car over its contract. 

Car leasing is a great choice for drivers and we are here to support you through the contract including at the end of the agreement so please don’t hesitate to reach out if you’re an existing customer and have any questions.

What is a Lease Extension?

When you reach the end of your lease you might want to keep the car for longer than the contract agreement. If you do keep the car for longer than the original end date then you will enter into a lease extension.

There are two types of extensions: informal and formal and which one you enter will depend on your circumstances, how long you want to keep the vehicle and your original contract length.

Why Extend Your Lease Agreement?

We’ve mentioned the delay in supply of new cars as one reason why you might extend your current lease already, but there are a few other reasons you could choose to keep the vehicle including:

  • Liking the car and wanting to keep it for longer
  • No new vehicle arranged
  • Not wanting to be tied to a longer-term financial commitment
  • An upcoming expected change in circumstances that may require a different type of vehicle soon but not just yet

We find that the most common reason our existing customers choose to extend their current lease, even before the current crises affecting supply, is to tie in returning the vehicle with the arrival of their new one.

What is an Informal Extension?

An informal extension is when you do not have a formal agreement in place, so there are no additional contracts to be signed.

This kind of extension can be useful if you only need to keep the car for a couple of weeks or days over the contract end date until your new car arrives.

There are a few things you need to bear in mind with an informal extension though. Firstly, the funder can ask for the vehicle to be returned at any time and as you are no longer in contract you must return it to them.

As you have not formally agreed to extend the contract the mileage allowance will be pro-rata based on your previous contractual allowance and you will not be able to amend this.

Your payments may also change from what your previous monthly payments were as well as they will no longer take into account the initial rental amount. Additionally, the date that you make these payments will also change as you will no longer be charged in advance as you were during the lease but will instead be charged in arrears at the end of the rental month.

What is a Formal Extension?

A formal extension is when you sign additional documentation to keep the vehicle for an additional period of time, usually six months or a year.

You will find that like your original finance documents a formal extension will have a set monthly rental payment, an agreed-upon mileage allowance and be for a set period of time.

When looking at if a formal extension is right for you you’ll need to consider if you want to be committed to a contract for a set period of time and pay an early termination fee if you leave it early.

The monthly cost may also change for you, even if you do not change the mileage terms as the funder will take into account the vehicle age and the current market as well as the other factors that went into calculating the rentals initially.

Please note that you will need to contact the funder before the end of your existing lease agreement in order to arrange a formal extension and that most will require you to get in touch at least before the last monthly rental payment is taken as a minimum. We advise reaching out when you have about eight to six weeks left on your contract to arrange an extension if you want one, to allow plenty of time for the paperwork to be signed and approved.

What is Better for Me?

This depends entirely on your circumstances. If you are not going to need the vehicle for much longer than your original term then an informal extension would be the best option. If you want the certainty of having the car for the time you need it then a formal extension would work better.

We recommend thinking about why you need to extend, how long you think that you will need the vehicle for and taking into account whether you would be able to hand the vehicle back with little notice if the funder asked for it.

How to Get an Extension

You will need to contact your funder to arrange an extension.

If you are looking for an informal extension then you will just need to confirm that this is allowed and what the rentals will increase to so you can decide if this is the right choice for you.

However, if you want a formal extension then they will usually require some additional information from you including the current vehicle mileage, how long you want to extend and the mileage allowance for the extension. You will then be asked to sign a contract extension and they will then process the formal extension for you once this is received back.

If you have a lease through Xcite Car Leasing currently and want to discuss extending your lease then get in touch with our Customer Services Team on 0330 221 0000.

For more information on what happens if you don’t extend your lease then please take a look at our end of lease guide.

Lease Extension FAQs

What’s the maximum I can extend by? Most funders will have a maximum total length of time that you can keep the vehicle and a maximum mileage that the vehicle can have during this time. You will find that most funders allow you to keep the vehicle for around 60 months, however they will usually only offer a six month or one year extension. Some funders may allow you to take an additional extension when you near the end of the original extension, but this will not always be an option.

How long can I keep a lease car? You will usually be able to keep a lease vehicle for a maximum of 60 months unless your funder offers the option to purchase the vehicle and you wish to do this. If you do purchase the car then you will then become responsible for its maintenance (if a maintenance package was taken) and road tax, which the funder would have covered during the lease.  If you do extend your lease agreement then you may not reach 60 months as some funders will have limits on the number of times you can extend, how long you can extend for at one time and the total mileage allowance.

How many times can I extend a lease? This will depend on the funder as some may only allow you to do one extension while others may allow you to have multiple extensions to one agreement. We would recommend speaking to your funder and confirming with them directly how many times you can extend the lease.

What happens to my mileage allowance when I extend? This depends on whether you go into a formal or informal extension. If you enter an informal extension, then you will have a pro-rata allowance based on your previous contractual allowance. However, if you opt for a formal extension then you will be able to amend your overall contractual mileage so that you can increase or decrease the allowance for your additional contract period.

Please note most of the above information is for personal leasing but most will apply to business leases as well. If you have any questions then please do get in touch.


Enjoyed this article? Read more of our latest blogs below:

Want to know more about car leasing?

For all our latest news and blogs click HERE.

Looking for the next best car leasing deal? Check out our Top Leasing Deals.

Or do you need to know more about leasing? Check out our Guide Pages.

Leave a Comment

Enter the text you see in the image in the form field above.
If you cannot read the text, refresh the page.
* required fields

Peace of Mind

Check out one of our helpful guides or our explaination of leasing to get all your questions answered.

View our FAQsGuides

Latest News

Get the latest news and blog posts from us.

View all News

Your Guide To Car Leasing

You can unsubscribe at any time

Lease Plan