What happens at the end of a car lease?

At the end of your car lease you can look forward to upgrading to one of the newest car models available. However, before you can start driving your new car, here’s everything you need to know about returning your lease car.
When your current car leasing contract ends, there are a few simple tasks you’ll need to take care of. Our guide will take you through returning your lease car step by step, so you can be confident you’ve covered everything. We’ll explain how to arrange the car’s collection, assess fair wear and tear and other damage, and let you know what documentation you’ll need. We’ll also cover any end-of-lease charges you may come across once the car is returned to the finance company. Jump to: • Arranging car collection at the end of a lease • Preparing your car for collection • What happens when the car is collected? • What are end-of-contract charges? • What if I exceed my agreed annual mileage? • What happens if my car is damaged at the end of the lease? • What Is Considered Fair Wear And Tear? • Disputing Charges After Your Car Leasing Contract Has Expired • Can I Return A Lease Car Before The Contract Expires? • What Happens If I Return My Lease Car Late? • Can I Extend My Lease Contract At The End Of A Car Lease? If you want to find out what happens at the end of a van lease, read our van-specific guide.

Towards the end of your lease period, you may be contacted by your account manager, lease provider, or finance company to arrange the collection of the car. However, this isn’t always the case, so ensure that you know the date that your lease expires, so that you can be proactive and arrange the collection yourself if needed.
You’ll need a few bits of information to hand when booking a collection including: •Your lease car's registration number. •Your preferred collection address. •A preferred date and time. If you’re looking to lease a new car with the same provider, your account manager may also be able to help you arrange for a new lease car to be delivered on the same day, to minimise any disruption to your driving.

Once you’ve arranged a time and date for the car’s collection, it’s important to ensure the vehicle is in the best possible condition. This quick checklist will help you ensure everything is ready to hand the car back:

Read the BVRLA’s fair wear and tear guidelines

Your leasing provider should be able to supply these guidelines, which will give you the information you need to know on what kind of wear and tear is expected and acceptable, and for larger damages, what you may be liable for. Read our car leasing maintenance explained guide for more information about looking after your lease car.

Check the car yourself inside and out

Once you’ve read the BVRLA Guidelines, take a look at the car yourself as far in advance of the arranged collection date as possible. Identify any damages that you think you may be liable for so that you have plenty of time to get them repaired in advance.

Remove personal belongings and have the car professionally cleaned

As the expiration date of your car lease gets closer, it’s a good idea to thoroughly check you have removed any personal belongings from the car. Items left behind could hinder your inspection on the day, or you could lose something important. We also recommend having the car professionally cleaned before the inspection to ensure that both the exterior and upholstery are in good condition.

Collect keys and documents

Make sure you have all sets of keys that belong with the vehicle ready to hand over, as well as your original lease documents including master copies for the inspector to check. The car's service history, owner’s manual, and a valid MOT certificate (if your lease was longer than 3 years) should also be held together for the inspector to collect.

When your arranged collection time and date arrives, a driver will come to your specified address. You’ll need to hand over all the items described above and fill out some documentation to confirm that you’re no longer responsible for the car.
The driver, or sometimes an inspector sent before collection, will look over the entirety of the car to note any damages that may not be considered fair wear and tear. You’ll be informed after the inspection of anything that you’ll need to be aware of. The inspector will also ensure that all documents are up to date, and see if the car has gone beyond the mileage agreed in your lease contract. If at the end of your car lease the vehicle has done excess mileage to what was agreed then you may be charged.

Once your car lease contract has expired and the car has been collected, you may be required to pay charges depending on the state of the vehicle. The most common charges include excess mileage and wear and tear not covered by the BVRLA guidelines, but other charges can occur.
Excess mileage charges will occur on a pence-per-mile basis when you exceed the contracted total mileage allowed on your lease. Damage charges will occur if your vehicle is damaged beyond what is considered fair wear and tear - for example, a small dent or scratch on a single panel is fine, while a whole missing panel is not. Your lease provider will require that your car is serviced according to the vehicle’s service schedule during the lease period, and if the car's service history does not match up you could incur a penalty charge.

Excess mileage is a common end-of-lease charge. If you drive your car beyond the annual mileage agreed in your lease contract, you’ll be charged a penalty. Excess mileage charges are usually charged per mile that you’ve driven over the limit, and the cost can vary depending on your lease provider. The easiest way to avoid this charge is to carefully work out your required mileage before committing to a lease.
Remember, your annual mileage is totalled up over the duration of your lease. For example, if you have a 10,000-mile annual mileage limit and a 3-year lease, so long as you haven’t exceeded 30,000 miles at the end of your lease you’ll be fine.

If you have an incident that causes damage to your car, you will be required to report it to both your insurer and lease provider at the time. Often, leasing providers will have preferred partners to send the vehicle to for repair works, however, you will be liable for the charges.
If you return the car at the end of your lease and it has unrepaired damage that is not considered fair wear and tear, you will be required to pay a penalty charge to make up the shortfall in the vehicle's value and compensate the company financing your lease. It is always recommended to ensure the vehicle is in good condition before your car lease contract expires.

Here are some sample definitions from the BVRLA about what constitutes acceptable damage and wear on your lease car:

Examples Of Acceptable Fair Wear & Tear

•Small scratches on the windscreen which are outside of the driver's line of sight. •Worn tyre tread depth but no more than the legal minimum requirement of 1.6mm. •Light scuffs on the bodywork which are no larger than 25mm. •Slight wear on upholstery from normal use.

Examples Of Unacceptable Fair Wear & Tear

•Chips in the windscreen glass. •Tyres with a tread depth less than 1.6mm. •Multiple deep dents on a single panel of the exterior. •A permanent stain to the upholstery.

If you disagree with the assessment made when your car is collected you have the right to dispute the charges if the lease provider is a member of the BVRLA, who provide an impartial service called ADR, which stands for Alternative Dispute Resolution.
You’ll need to pay for an independent assessment of the car against the guidelines, and the engineer's decision cannot be appealed. If the engineer agrees with your dispute and believes the car is in an acceptable condition, the examination costs will be fully refunded and penalty charges for damage dropped. Of course, it’s best to avoid this end-of-lease scenario by taking good care of the lease car for your contract duration.

Ending your lease early is known as early termination, or voluntary termination. If you want to end your car lease before the agreed contract date, you’ll be expected to pay a termination fee to the lease provider or finance company. This varies, but is normally around 50% of the total remaining rental payments left on your agreement.
If you are concerned about being able to make your monthly payments, always contact your lease provider to see what the best option is for you financially. Sometimes cancellation may not be the best way to end your car lease.

Normally, your lease provider will contact you to arrange collection a few months prior to the lease expiry date, but if you fail to arrange collection, or miss the agreed collection date and time, you may be charged late fees depending on the details of your contract.

Car leasing fees are based on the expected residual value (resale value) of the car after the lease expires. Of course, some depreciation is expected, but the finance company providing your lease will want the car returned with good resale value. Because of this, most leases will not be extended beyond the agreed initial term, so that the car can be sold on in as good condition as possible.
However, in some cases leasing providers will be happy to discuss an extension, so it’s always worth an ask. While you won’t be able to renew the exact lease you have taken out, the lease provider may be able to offer you these two options:

Formal Extension

When a new and agreed extension of your leasing contract is made between you and the finance company or the funder that your car lease was originally arranged with, then it’s called a formal extension. With a formal extension, you can keep the vehicle with you for a slightly longer period (usually 6-12 months). The formal agreement must be signed with the funder or finance company, and it should include the following information: • The new monthly rental cost (this may go up or down, but will be confirmed before you sign the agreement) • The agreed extension period (usually 6 or 12 months) • The agreed new annual mileage allowance • The new end date • Any servicing/maintenance packages and the costs • Any administration fees for arranging the formal extension. Once your formal extension agreement ends, you must hand the car back to the company.

Informal Extension

With an informal extension, you can simply keep the car past the original leasing contract date without putting a new financial agreement in place. Some funders or finance companies will allow informal extensions while some will not, so you must check your contract, as well as with the funder or finance company first. If you enter an informal extension, the following circumstances must be noted: • The funder or finance company can ask for the car back at any time • Your mileage allowance cannot be changed • If you exceed your previously agreed mileage allowance, you will be charged on a pro-rata basis • Your monthly rental payments will stay the same as previously agreed • The date on which your monthly rental payments are taken each month might change

Before you arrange for your current car to be collected, you can decide whether you want to lease another car. Find out more about how car leasing works, or browse our latest car leasing deals for great monthly prices on the latest makes and models.