An area we get asked a lot of questions from our existing customers is end of lease charges. Whether you’re new to leasing or a practised hand we know that you might be feeling apprehensive about returning your lease car and any additional charges you may face, so we’ve put together this article to help alleviate any fears.

What Can I Be Charged for at the End of My Lease?

There are five main reasons that people receive charges at the end of their lease, which are:

  • Going over your mileage allowance
  • Damage to the car (interior and exterior)
  • Missed servicing
  • Missing items
  • Keeping the car for longer than the contract length

In this article, we’ll break down why you might be charged for one of these issues, how you can avoid them and what you can do to challenge them.

Excess Mileage Charges

When you take out a lease agreement you agree to a contract mileage. This is because the resale value of the car at the end of your lease will be in part based on the mileage it covers. One thing to be aware of is that the resale value is used as part of the calculations for the lease price, and although it can be tempting to opt for a lower mileage for a cheaper deal you may end up paying more for this in the long run if you go over the allowance.

When you take out a lease contract you agree to an excess mileage charge, this will be the amount that you pay at the end of the lease agreement if you exceed your mileage allowance. The charge will usually be a pence per mile amount, so you will pay a set amount for each mile you go over the limit.

For customers with a maintenance package, there will be two excess mileage charges – this is because there is one for the finance contract and one for the maintenance contract. This is because general wear and tear increases the more miles you travel.

You can avoid being charged for excess mileage by making sure your mileage allowance is realistic for your driving needs. When you take out a lease agreement we recommend thinking about your current annual mileage and using this as a base for your annual allowance. You’ll also want to consider if you expect there to be any changes during the contract that could affect your mileage, for example a child moving to a school that’s further away, a change in job role or the household getting a second car.

Most funders will allow you to amend your mileage provided you are over one year into the lease and have more than six months left. So, if you do find yourself covering more miles than you expected to you’ll be able to make an amendment to avoid charges at the end of the contract. However, any changes to your mileage may mean a change to your monthly payments.

Damage and Repair Charges

Damage and repairs can be the most expensive of charges that you could receive, which is why it’s important that you look after the car while you have it.

Damage not only includes the interior and exterior condition but also any issues caused by driver misuse or neglect including not getting the vehicle serviced or repaired when required.

Something to be mindful of if you do have anything repaired is that this needs to be done to a high standard, as any subpar work will need further repairs and you will be charged for this work to be done a second time by the funder.

How to Avoid Damage Recharges

There are a few steps you can take to minimise being charged for damage to your lease car.

Regular car care is essential whether you’re leasing or not and will reduce the risk of damage. This includes maintenance checks like topping up the fluids, tyre pressure checks and assessing the vehicle condition to spot any changes that indicate a potential issue. 

Cleaning your car regularly is another way you can reduce damage. Regularly washing the exterior of the vehicle prevents sap, bird poo and other dirt that can accumulate on the paintwork from causing discolouring or becoming misshapen. While keeping the interior clean will prevent any food or rubbish damaging the interior, as well as reducing the distractions for you while driving.

Missed Services

When you lease a car you agree to keep up with the recommended servicing schedule as per the manufacturer’s guidelines. If you miss a service or have an incomplete or missing service documentation then you will be charged by the funder for this. A complete servicing history is important for the funder as it gives them and anyone they sell the vehicle onto a reassurance that the car has been looked after as it should have.

Missing Items

You can also be charged if there are items or parts missing from the vehicle. This includes on the interior and exterior.

The most common missing item we see customers being charged for is a missing key. If the vehicle is supplied with two keys, as most modern cars are, then you will need to return both of these at collection.

Some manufacturers supply new cars with a plastic key fob or card that is needed in order to set up their app and connect your phone to your car. This will need to be kept and returned with the vehicle to the funder so that they are able to sell it on with the ability for the next driver to set up smartphone connection. If this is missing most funders will charge you for the full cost of a replacement which can be up to £150, depending on the brand.

Other missing items that we have seen charges issued for include:

  • Aerials
  • Hub caps 
  • Floor mats
  • Charging cables
  • Parcel shelf

This is not an exhaustive list but the most common missing items that we’ve seen charged for. The best advice we can give is to ensure anything that arrived in the vehicle is there at collection.

Keeping the Car for Longer than the Contract Length

One of the most common charges that our customers encounter is for keeping the car longer than the lease contract. Unless you enter a formal extension you will be charged pro-rata for the extra days you have it. As we mentioned in our blog last week keeping the car past the contract end date can be useful for some drivers. For example, if you’re still waiting for a new car then keeping your current car until delivery makes sense.

Something to be aware of if you do keep the car on an informal extension then payments will be pro-rata but will no longer take into account any initial rental payment you made at the start of your contract, which means the amount you pay monthly could change.

When Will I Know If I Have Additional Charges for My Lease Car?

After the vehicle has been taken away the funder will review the collection report. Based on this they will identify if there are any additional charges and then provide you with a copy of the collection report and charge breakdown. In the notification, it will usually include what the charge is for, how much the charge is, and how this is calculated. Most funders will also include the contact details for the team if you have any questions and details on how the payment can be made.

How Are End of Lease Charges Paid?

Unless you have already cancelled it most funders will use the direct debit details from your monthly payments to take any additional charges at the end of your lease agreement. If you have cancelled the direct debit or prefer an alternative method of payment then you will be able to contact them to arrange this.

Can I Dispute End of Lease Charges?

Yes, if you feel that a charge is incorrect or unfair you can dispute it with the funder. You will simply need to get in touch with them via the contact details provided on your copy of the collection report.  

We recommend lodging a complaint about the charges as soon as you are able to if you want to dispute them.  

When challenging a charge you want to consider: what is the charge for, and do you think this is a valid charge? If not, is it because the issue falls within the fair wear and tear guidelines? Some people can understand the reason for the charge but not the amount itself and you can still challenge the charge if this is the case for you. The funder should be able to give you an explanation of their charges.

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