Car leasing: how to avoid extra charges

Leasing a car is a great way to get a desirable vehicle for an affordable monthly payment. However, as leasing works a bit like long-term car rental, you never own the vehicle.

This means it’s your responsibility to keep the car in good condition and within the mileage allowance specified on your contract. Neglect to do this and you can expect end-of-contract charges when you hand the keys back.

Furthermore, you’re likely to face wear and tear charges if you fail to maintain the car during your lease – or any of the equipment provided with it – in accordance with the contract. As the leasing company owns the car, charges may be issued for any damage that reduces its value – to cover repair bills or loss incurred from selling-on a less valuable damaged car.

It’s no different to if you owned the car yourself; the better condition it is, the more you’d get when you sold it.

Don’t worry, however, as it’s simple enough to avoid this type of charge if you look after the car well and are aware of your contractual obligations when it’s delivered.

What might I be charged for at the end of my contract?

Charges may be issued for everything from going way over the agreed mileage allowance to forgetting to service the car or returning it covered in scrapes.

These are not the only things, though. We’ve listed the most common end-of-contract charges below. All of these should be easily avoidable with a little planning at the start of the contract:

• Exceeding the mileage allowance
• Exterior damage
• Interior damage
• Missed services
• Missing service history
• Missing spare keys

Some of the most common end-of-contract charges come in the form of excess mileage charges. Find out how to avoid substantial here.

Car leasing: our obligations & how to avoid end-of-contract charges

Make sure you understand what your obligations are before signing the leasing contract. Since you’ll be locked into the contract for years, it’s worth spending half an hour reading through all the paperwork to make sure the offer suits your needs. If you’re unsure of anything, be sure to clarify the details with the leasing company.

Once you’ve confirmed the details and signed the contract, it’s wise to highlight all the details:

• mileage allowance
• fair wear and tear terms
• any other obligations specified (such as whether you’re prohibited from smoking in the car).

Make a note of these and leave it somewhere visible, while putting all the documents somewhere safe.

Scheduling reminders on your phone or sticking a note of the key details on the fridge could help you keep tabs of your mileage, for instance, to avoid ending the contract way over the agreed mileage allowance – and some leasing companies will help by sending periodic reminders, too.

Similarly, setting a few reminders could help you to book the car in for a service on time – potentially saving you hundreds or even thousands.

What counts as fair wear and tear?

Leasing companies specify different fair wear and tear rules, but any company that is a member of the BVRLA – the British Vehicle Rental and Leasing Association – should follow its guidelines for what is and isn’t acceptable. The core principle is that the car’s condition should be in line with its age and mileage when returned.

• E.g. a one-year old, 6,000-mile car should look practically new whilst a four-year old car that has covered 100,000 miles isn’t expected to be pristine - worn driver’s seat bolsters should be perfectly acceptable, for instance
• Do take care when parking – a substantial proportion of new cars have large alloy wheels and it’s very easy to scrape which will be very obvious when the car is collected
• If the tread on your tyres is below the legal limit, you’ll need to replace them to avoid a wear and tear charge after your lease.
• If your previous cars have all been covered in dents and scrapes, it may be worth spending a little more to lease one with parking sensors – as these could stop you picking up more damage
• Remember to keep the interior in good condition, too - torn seats, stains and cigarette smoke smells can lead to fines as well

Get the car serviced on time and don’t lose the spare keys

The car may look immaculate when handed back, but if you’ve missed routine services or have no record of it being serviced, the leasing company is likely to charge you – as a lack of service history can substantially reduce a used car’s value.

It’s wise to make a note of the car’s service intervals at the start of the contract to ensure you get it serviced on time. Many cars now have variable service intervals – if yours has, it’s a good idea to note what range these might pop up, so you don’t inadvertently ignore the dashboard symbol when it appears and risk an extra milage charge after your car lease.

Modern car keys can be pricey, too, so you can expect to be charged around £125 to have another one made. If you worry about forgetting where you’ve put the spare, leave a note on your phone and potentially with the leasing contract, so you can find it when needed.

What should I do before my lease car is collected?

• Clean the car - if it’s so dirty it’s impossible to inspect for damage, you may be charged to clean it
• Ensure the fuel tank is a quarter full
• Freeing up some time when your car’s being collected - if the person inspecting it flags any issues you can question these in person while you’re both by the car

Should the leasing company intend to issue any end-of-contract charges, it has to inform you of this within four weeks of collecting the car. Leasing companies that are members of the BVRLA must provide an itemised breakdown of the charges with supporting photo/video evidence.

If you still disagree with any of the charges, you are able to appoint an independent qualified engineer to examine the evidence, providing the company is a BVRLA member. The engineer’s assessment is final and if they judge in your favour, the leasing company must reimburse you for the cost of hiring the engineer.