What happens at the end of a car lease?

5 minutes Published: 21/06/2021

Having your new lease car delivered is exciting. 

It arrives and you’re delighted - the paint work is spotless and it’s got that distinctive ‘new car smell’. 

Fast forward three years, and a fair few trips around Britain’s bumpy roads, and your once brand new lease car isn’t looking as good as it did when you first got it. 

There’s a fair chance you’re sick of your car - you find yourself enviously looking at all the new car models on Lease Fetcher.

Thankfully, with most lease contracts, you don’t have to hold on to the car once your contract is over! 

Since you're here, we assume you know how car leasing works right up until you hand back the keys. We’re going to run you through exactly what you can expect to happen when you finish up a lease contract. If you're thinking of ending a car lease early, you can read about your car lease cancellation rights.

Doing a bit of researching before signing a lease contract? Or are you coming to the end of your current deal and looking for a new one? Let Lease Fetcher help you compare car lease deals - see our personal car leasing and business car leasing deals for more!

So what exactly happens at the end of a lease contract? 

What happens at the end of the lease depends on what kind of personal lease deal you have. 

Here’s the 3 options: 

  • Personal Contract Purchase (PCP): You make monthly payments on the car, and also have the option to buy out the car at the end of the contract. This is called a ‘balloon payment’ and is usually a pretty large sum. Most choose to just hand the car back and get a new one instead. We answer "what is PCP finance" in this post if you're interested.
  • Personal Lease Purchase: A personal lease purchase is where you make monthly payments like you would with a normal lease contract, but at the end of the term, there is no option to return the car - you need to buy it. 
  • Personal Contract Hire: Your standard lease. You pay an initial rental, and pay a fixed amount per month until the end of term, when you’ll hand the car back. 

Do I need to get in touch with the leasing company?

The leasing company will already have a record that you're coming to the end of the lease deal. They'll almost certainly be in touch a few months before the end of the lease to see if you want to set up a new deal so it's all ready for when you return your current one.

You don't need to get in touch with them unless you've got a private plate on your financed car, in which case you'll need to do some paperwork to arrange taking it off.

Do I need to drop the car off? 

If you’ve opted for a PCP deal and don’t want to pay the balloon payment, you’ll simply have to drop your leased vehicle back off at the dealer. With other lease deals, it’s more common for the finance company to arrange for someone to come and collect the car. 

One benefit of taking out a contract hire deal is that you’ll typically have the new car delivered on the same day as your old one is picked up, eliminating any time where you don’t have a car.

Are there any charges for returning the lease car? 

There shouldn’t be any lease car return charges at the end of the contract - the cost to lease a car is what is stated upfront, but the company may add on additional charges for various reasons.

Here’s a few charges you might have to pay up for:

  • ‘Unfair Wear and Tear’ damage charges:  What’s considered ‘Fair Wear and Tear’ can be a bit confusing. The vast majority of leasing companies follow something called the BVRLA guidelines (British Vehicle Renting and Leasing Association), which have a standardised set of requirements for damage to be considered ‘fair’. We’ve got a guide to help you understand this. Make sure your car is tidy too - learn how to wash a car properly before hand-back day!
  • ‘Excess mileage charges’: This is a penalty for going over the mileage limit you arranged at the start of your contract. This varies considerably based on your leasing company, but it can be anywhere from 4 pence per extra mile up to 70 pence per mile! Check out our article for more information on excess mileage charges
  • Breach of contract: If you don't follow the terms agreed in the contract, like making sure servicing on your lease and lease car repairs were completed on time at an approved location, then you will also face some financial penalties. Find out more about the types of car service and how often you should service your car.
  • Outstanding charges: You'll need to pay off any car lease speeding tickets and potential associated admin fees - these are sent to the leasing company since they are the registered keeper of the lease car. They'll pass them on to you so make sure you pay them in full before your contract ends.

You can be sure that your car will be in good nick if you take out a lease car maintenance package (we explore whether a car lease maintenance package is worth it if you're not convinced) and follow a comprehensive car maintenance checklist!

What happens at vehicle collection? 

Some leasing companies will arrange for a full vehicle inspection at the time of collection, while others prefer to collect and then inspect later at their own garage.

We recommend that you insist on being with the inspector. It’s important that you and the leasing company representative agree on the vehicle’s condition. 

All apparent damage, fair wear or tear or not, needs to be noted on the vehicle collection sheet - and you need to sign for this. 

If you don’t agree with the collector about the damage to the vehicle you have a right to pay for an examination of the car by an independent mechanic.

It’s worth remembering that lease companies aren’t looking to catch you out. The BVRLA guidelines are pretty precise in their view of fair wear and tear (scratches measured to the millimetre etc.), so you know you’re not getting conned. 


By the end of your lease period, you’re probably excited to get a new car. If you’ve taken out a contract hire, like our deals on Lease Fetcher, then you simply have the new car dropped off and the old one taken away.

Leasing is an excellent way to always have the safest cars with the highest tech, and it prevents you from having to worry too much about costly repairs or MOTs. 

If you're currently just researching everything car-leasing related before setting up a deal, be sure to use Lease Fetcher to compare lease deals when you're ready for your next set of wheels. We have gathered the most competitive personal car leasing and business car leasing deals on the market, making your search so much easier.