DriveArchive Article 165

Quick Registration Search 

Returning your Lease Car: What Happens?

Leasing a car is such a common way to finance a car nowadays, with around three quarters of new cars purchased on finance, according to Which?. However, not many people know about the process of returning the car, from the end of the contract to what happens to your car afterward.

What happens at the end of the contract?

When you purchase a car on finance, it is handed back to the finance company, as it isn’t owned by you. The company will usually get in touch with you to give you a collection date, which should allow you enough time to get the car valeted and get any damage repaired.

Buying the car

If you really like the car and you wish to own it, you will have to speak to the finance company. If you took out a PCP agreement, you may have the option to buy it for a balloon payment based on the value of the car at the end of the contract. For other types of leasing contracts, whether you are allowed to buy the car is up to the finance company.

Extending the contract

If you like the car but you can’t afford to buy it, you might be able to extend your contract. Once again, this is up to the finance company – they will look at the condition of your car and how you’re handling the finance, so if you’ve missed any payments, they may not want to extend your agreement.

Cancelling the contract

Cancelling your leasing contract depends on the finance company, but you generally can’t cancel in the first year and after that, you’ll need to pay a fee of 50% of the remaining rental.

Fair Wear and Tear

When your car is collected, it will be inspected for any damage with you present. The inspection must adhere to ‘fair wear and tear’ guidelines that are set by the BVRLA, the trade body for the leasing sector. However, you should inspect your car yourself around 10 weeks before the end of the contract, so that you have time for any repairs to be carried out. The outside should be inspected one panel at a time for scratches and dents. Next, take a look at the lamps, mirrors and windows for chips and cracks, and then the wheels and tyres. Moving on to inside the car, check for stains in the upholstery and check that all dashboard controls are functional. If you can get a friend or relative to do the same, you’ll have additional peace of mind when your vehicle is collected. If there is any damage to your vehicle beyond what the BVRLA consider ‘fair wear and tear’, you’ll have to pay damage charges. Common issues include:

  • Scratches over 25mm/scratches where the primer and metal are showing.
  • Damage and dents from accidents.
  • Missing keys.
  • Stained interior.
  • Windscreen chips.
  • Damage to the wheels.

If you disagree with an aspect of the inspection, you can pay for an inspection by an independent engineer and their decision will be binding. If your dispute still hasn’t been resolved, you can refer it to the BVRLA.


If you have gone over the mileage amount that you agreed with the leasing company, you will need to pay an excess mileage fee at the end of your contract. This is based on how many miles you have driven over the agreed mileage amount.

What happens to the car

If you don’t keep the car, then it will go on to a new life in the used car market. Some leasing companies will put the car up for auction, whereas others will transfer it back to the manufacturer’s official dealerships so that it can be sold on.

There are a lot of things to think about when you lease a car, and sometimes, the thought of inspection and additional fees when you return it can put you off. However, if you look after the car and inspect it yourself before you return it, you will know what to expect. Always make sure you’re happy with the inspection and you have a copy of their notes for your records, in case you need to dispute anything.

© All Car Leasing 2017