How to avoid end-of-lease charges

Have a lease car and are concerned about big end-of-contract charges? Keep reading to find out how to avoid big bills when returning a car

Matt Rigby
Aug 16, 2021

Leasing can be an efficient and cost-effective way to access a brand new car, but it’s important to remember that you never own the car. In effect, a lease on a car is basically like a long-term holiday rental agreement.

And, just as with an ordinary rental car, the condition of the car when you return it is absolutely crucial. If you have gone above the pre-agreed mileage limit, or there is damage to the car over and beyond fair wear and tear, you may well be charged a financial penalty when it comes to the end of your contract with the leasing company.

This is because the leasing company - which owns the car - sets the monthly payments on the understanding that the car will be worth a certain amount when it's sold on at the end of your lease term. If the vehicle has covered more miles than expected, or is not in the sort of physical condition you would expect for its age and mileage, then it's likely to be worth less than the leasing company had planned for - losing the company money.

However, if you’re careful with how you treat your lease car, and make sure you set a realistic mileage limit when you take out a lease agreement, there's no reason to be worried about hefty extra charges. If you think you're going to go way over your pre-agreed mileage limit, you can always contact the company and agree a higher limit. You're likely to have to pay a little more every month, but this typically costs less than going over the limit and having to pay a penalty at the end.

What exactly is ‘fair wear and tear’?

In essence, fair wear and tear is the deterioration in a vehicle’s condition typically caused by the normal usage of it over time and mileage. This means that you shouldn't have to worry about a little bit of wear on the driver's seat bolsters in a car with a contract to cover 60,000 miles, as you'd expect to see some wear with that kind of mileage. However, if there are many rips in the fabric and numerous cigarette burns, this goes beyond the typical wear expected and you can anticipate a charge to recitfy this type of damage.

Several types of vehicle deterioration can count as wear and tear. One includes small chips on the bonnet, bumper or leading edge of the roof caused by stones kicked up on the road by other vehicles. Other examples include small bumper scuffs and scratches that don’t go into the car’s base coat of paint. This is considered normal and shouldn't result in any charges.

You can also consider some small bodywork dents par for the course of fair wear and tear. Effectively, these are the type of dents you might get from the doors of another car being opened into yours in a public car park, but larger dents are likely to be considered beyond fair wear and tear by the leasing company and could result in end-of-contract charges.

To understand exactly what constitutes fair wear and tear, it’s worth checking out the British Vehicle Rental and Leasing Association (BVRLA) Fair Wear and Tear Guide. This is a standard accepted across the leasing industry to help reduce the likelihood of customers incurring end-of-lease charges and ensuring lease companies act fairly. To get hold of a copy of the guide, you can request one directly from your leasing company.

End-of-lease charges for damage

If there are issues with your vehicle’s condition that are deemed to be worse than ‘fair wear and tear’, this damage could lead to end-of-lease charges. Normally, however, this should only happen if the vehicle, its equipment or its accessories have not been used or maintained in the way originally agreed.

Some of the most common causes of penalty charges for damage to a lease vehicle include wheel damage, excessive bodywork chips and dents, paintwork scratches, and stains or rips and burns on the vehicle’s interior. If you believe damage on your car goes beyond fair wear and tear, you are free to get these rectified before the car is collected. The better condition the car is when returned, the less likelihood there is of any surprise end-of-lease charges.

You can also ask the leasing company to give you an idea of what its typical charges are to rectify the type of damage to your car. If the company gives you an estimated charge of £500 but you can get the issues repaired for £300 by getting an external company to fix these before the car is collected, that could be a wise move. However, if the cost to do so would be £700, you can do nothing and pay any charges issued by the leasing company instead. 

End-of-lease charges for going over the mileage limit

The mileage you drive during the course of a lease is very important in assessing how much the company will charge you per month. This is because the higher the mileage of a car at the end of the contract, the less it is generally worth. So if you hand a car back to the leasing company with many more miles on it than they expected to see, they will get less for the car when they come to sell it on.

As a result, if you go over the pre-agreed mileage amount, the leasing company will seek to recoup some of its unexpected costs by charging you. Generally, this is a set amount for every mile over the agreed limit.

The costs for this can add up quickly, so if you think you are likely to exceed your mileage while you're in the middle of the contract, you should get in touch with your leasing company immediately to discuss the issue and they are likely to move you to a higher-mileage contract - although they are not obliged to change your contract terms.

How to prep your car before you return it

When your contract ends, you’ll need to hand your lease car back. Here are a few tips to help you ensure it goes back to the leasing company in the best possible condition. This should minimise the chance of receiving any end-of-contract bills.

Do your research and get ready well in advance

Get hold of a copy of the British Vehicle Rental and Leasing Association (BVRLA) Fair Wear and Tear Guide at least two months before the end of your lease. Go through it thoroughly, so you know exactly how to ensure you can avoid a penalty charge for damage.

Inspect the car

Have a good look at the car, inside and out, and in good light, so you can see any issues clearly. Before doing so, make sure the car is as clean as possible. This is partly because you can get penalty charges for excessive stains, dirt and odours, and partly because only when it’s clean can you really see the condition of the car, and identify any possible defects that you’ll need to rectify.

It’s also important that you check around the car in good weather and in an area where there’s plenty of natural light. If the car is wet, it may make it harder to spot any dents or external damage, while low light levels can also mean you might miss damage that could be obvious in good light.

Get any damage fixed

If you do manage to identify any areas of damage that exceed fair wear and tear, then it’s a good idea to get these fixed properly by a professional. Whether it’s a dent, scratch, rip or chip it’ll most likely cost you less if you have it fixed than to pay the leasing company’s charges.

If you're not sure whether it's worth paying to get any damage fixed, you can always talk to the leasing company to understand their typical charges for the type of damage that your car has. They will expect a certain level of wear and tear, and if they'd class the issues with your car as withint their expectations, there's no point in you paying to rectify them.

Preventative maintenance

Prevention is better than cure when it comes to avoiding end-of-lease charges; if you keep on top of the condition of the vehicle throughout its lease, you’re more likely to successfully head off any unwanted extra charges.

Regularly washing the car inside and out, for instance, including cleaning off any bird poo or interior spills before they cause stains could help you to avoid a bigger issue at the end of the contract, as could taking care when parking throughout the contract, to avoid scratching the alloy wheels.


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