What happens at the end of a car lease?

4 minutes Published: 13/12/2019

What's Covered

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 LeaseFetcher.

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

We’re going to run you through exactly what you can expect to happen when you finish up a lease contract. 

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. 

  • 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 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 charges for returning your lease car at the end of the contract.  

However, that’s assuming that your car is in good condition and is within the mileage limit you agreed upon at the start of the lease. 

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 (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. 
  • ‘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

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. 

Summary: 

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 LeaseFetcher, 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. 

To make sure you get the best lease deal for you, check out LeaseFetcher!