What happens at the end of a car lease?

Date Posted 10th October 2024
Read Time 11 min read

The basics of car leasing are pretty simple, particularly when it comes to what happens at the end of the contract. Once your lease is up, you give the car back. That, however, is not the end of this guide.

If you’re coming to the end of your lease, you might be wondering about how the returns process works, what end-of-lease charges you (hopefully won’t) need to consider and what your options are going forward. We’ll cover it all below.

If you’d like to get a better understanding of the general leasing process first, take a look at our guide to how car leasing works.

Understanding the end of the lease process

Here’s a quick overview of what typically happens at the end of a car lease in the UK:

  • Your lease provider will get in touch with you a couple of months prior to the end of your contract to arrange appraisal and collection of your lease vehicle and discuss new lease/purchase options.
  • You’ll prepare the car for appraisal and collection.
  • A representative from your lease provider will conduct a review of the vehicle. This will include an assessment of its condition and mileage to see if anything sits outside of your contractual terms, for example, damage beyond fair wear and tear guidelines or excess mileage.
  • Once the inspection has been completed, reviewed and agreed to, your lease vehicle will be returned to the leasing company.
  • If you have any end-of-lease charges to pay, these will be calculated and sent to you in a final invoice.

Returning a lease car

Arranging collection of a leased car

It’s likely that your lease provider will get in touch with you a month or two before the end of your lease to arrange collection of your vehicle. However, depending on your provider, this might not always be the case, and you may need to arrange collection yourself.

When you do come to arrange collection, you’ll need to provide the following information:

  • Your lease car’s registration number.
  • A collection address (this doesn’t have to be your home, it can be a place of work or somewhere else suitable).
  • A preferred date and time.

If you’ve decided to go for another lease deal with the same provider, you can arrange for collection day to also be drop-off day, with your new lease car arriving on the same day your old one is returned.

Inspection process

Your lease provider will send someone to appraise your vehicle before its return. This is usually a representative from the finance lender (and is often the person who will drive the car back, too). However, on occasion, a separate inspector may be sent before the car is picked up, and in some cases, the appraisal may be arranged a few weeks before collection – this will all be confirmed by your lease provider.

The inspection will be a full review of the vehicle’s condition. The main things the inspector will be looking for are damage that sits outside of what’s considered ‘fair wear and tear’, and whether the car has driven above the mileage you agreed to in your contract. The appraisal will look at the following:

  • Exterior.
  • Interior.
  • Tyres.
  • Mechanical function.
  • Mileage.
  • Accessories.

When the inspection is complete, the inspector will prepare a report that details the condition of the vehicle. You’ll get a copy of this report which will need to be agreed to by both parties before final charges, if any, are calculated. Find out more about this in our leasing wear and tear guide.

Documentation and accessories

You’ll need to return all the documentation the car was provided with and have your original lease documents on hand for the inspector to check. The documents you’ll need are:

  • Vehicle service history.
  • Owner’s manual.
  • Valid MOT certificate (if the car is more than three years old).

You’ll also need to return all the accessories that the vehicle came with. Some common ones include:

  • All sets of keys.
  • Floor mats.
  • Charging equipment (for hybrid or electric vehicles).

Preparing for the inspection – returning a lease car checklist

Naturally, you’ll want to return the vehicle to your leasing provider in the best possible condition to give you the best chance of avoiding any potential charges. Your return checklist should look something like this:

Read up on what’s considered ‘fair wear and tear’

There are two places to look for advice on what’s considered fair wear and tear. The first is your lease agreement, which will detail your provider’s specific expectations, and the second is the BVRLA Fair Wear and Tear guidelines, which will give you a general idea. Indeed, many providers use the BVRLA guidelines as their own.

Getting to grips with these guidelines is best done at the start of the lease. Once you’ve got an understanding of them, you’ll know what’s considered ‘excess’ wear and tear. Then, if you do have any problems, you’ll be able to rectify them in advance of collection, challenge them or, at the very least, be prepared for a charge.

Exterior and interior check

Do a thorough check of the exterior paintwork and wheels for any large scratches, dents or other damage well in advance of the inspection so you have time to handle any issues. On the inside, check the upholstery for any stains or damage, make sure all equipment is working properly and get rid of any strong odours. Make sure any personal effects are removed from the vehicle and all provided accessories are in there.

Referring to your lease agreement or wear and tear guidelines will let you know what is and isn’t worth worrying about.

Get the vehicle cleaned

It’s never a bad idea to get the vehicle professionally cleaned. While it’ll cost you a few quid, it’ll potentially save you more, as a proper clean will take much of the legwork out of preparing the car for its return.

Get your paperwork together

As mentioned in the list above, make sure you’ve got your original lease documents and all the documentation the car was delivered with in order and to hand. Don’t forget about the spare key if you got one with the lease.

End-of-lease charges

If you’ve looked after your car, stuck to your lease agreement and not had any unfortunate moments with the bollards down at the supermarket or something similar, end-of-lease charges aren’t something you need to be concerned about. However, they are something to be aware of, which starts with understanding your lease agreement and associated fair wear and tear guidelines.

Does the car need to be returned in perfect condition?

No, it would be ridiculous to expect a car driven for two to four years to be returned as new. The expectation is that you keep the car in good condition for the period you drive it – that’s where the concept of fair wear and tear comes in.

What’s considered ‘fair wear and tear’?

The BVRLA defines fair wear and tear as “when normal usage causes deterioration to a vehicle”.

Some examples of fair wear and tear are:

  • Light scratches/marks/scuffs to the bodywork no longer than 25mm.
  • Minor dents no bigger than 15mm.
  • Natural dulling of the paint due to weather exposure.
  • Tyre wear within the legal limit (minimum legal tread depth is 1.6mm).
  • Minor wheel scuffs.
  • Light wear to the upholstery, carpets and high-use areas of the interior like the dashboard, steering wheel, gear stick and door handles.
  • Light scratches on the glass/mirrors and windscreen chips up to 10mm.
  • ‘Routine’ wear on mechanical components and the battery.
  • Minor accessory wear.

What’s not considered fair wear and tear?

Damage considered outside of fair wear and tear is what could land you with end-of-lease charges. Here are some examples of what to look out for:

  • Large scratches or chips to the exterior bodywork above 25mm.
  • Dents larger than 15mm or multiple dents on the same panel.
  • Cracks or damage to the bumper.
  • Any rust or corrosion, outside of minor chips.
  • Tyre wear beyond the legal limit of 1.6mm.
  • Damaged or heavily scuffed wheels.
  • Torn, burnt or excessively stained upholstery, and significant wear to the dashboard.
  • Broken or missing interior parts.
  • Windscreen chips above 10mm and significant scratches on the glass/mirrors.
  • Neglected maintenance leading to issues with mechanical components.
  • Missing accessories.
  • Personal modifications.

If your leasing provider doesn’t set their guidelines to BVRLA standards, make sure to check your leasing agreement to see if the wear and tear guidelines differ from the above.

Excess mileage

When you first sign up to your lease agreement, you’ll agree to an annual mileage limit. For a personal lease, this is typically in the region of 10,000 miles, but this can be decreased or increased as per your requirements. That means if you sign up to a four-year lease with an annual mileage limit of 10,000 miles, you’ll need to return the car with no more than 40,000 miles extra on the clock.

If you do go past your agreed mileage limit, you’ll likely be charged for excess mileage.

How are end-of-lease charges calculated?

Your lease agreement will offer some detail on how end-of-lease charges are figured out. Generally speaking, here are how some of the more common charge areas work:

  • Excess mileage: you’ll be charged at a pre-agreed rate per mile over the agreed limit. This is usually a few pence per mile.
  • Wear and tear: The cost of repairs will be added to your final invoice.
  • Missed servicing and maintenance: repair and service charges may be added for any missed maintenance or servicing.
  • Missing items: the cost of replacement will be added to your final invoice.
  • Early termination: if you want to end your lease early, a termination fee will apply based on your agreement and how long is remaining on the contract.

Disputing end-of-lease charges

If you don’t agree with the proposed charges, you can dispute them with your leasing provider. The process of disputing end-of-car-lease charges in the UK typically goes like this:

  • You’ll need to highlight your objections to the vehicle’s appraisal when you’re given the post-inspection report.
  • Another inspection will be carried out by an independent engineer.
  • The conclusions of the independent assessment are final and you cannot appeal again.
  • If the independent assessment judges in your favour, you’ll be refunded in full for the areas concerned.

End-of-lease quickfire FAQs

What happens to lease cars when they’re returned?

Lease cars often end up at auction once they’re returned from lease. That, or they’re resold, or they’re made available for used car leasing.

Can you buy a leased car?

With the most common type of leasing, personal contract hire (PCH), you can’t buy the vehicle at the end of the lease. It’s strictly a long-term rental agreement. At the end of the deal, you hand it back and move on – it’s that simple.

If you want the option to buy the car, you’ll need to look at lease purchase or other purchase finance types like personal contract purchase (PCP) or hire purchase (HP).

If you’re interested in other finance options, take a look at our guide to PCH vs PCP.

What happens if I return a lease car late?

It’s unusual for a lease car to be returned late. In most instances, you’ll be contacted well ahead of the end of the lease to arrange a firm collection date.

If, for some reason, you do miss the arranged collection date, you may be charged a late fee, which will probably be outlined in your lease agreement.

Can I return a lease car early?

You can end your lease early – but at a cost. Lease agreements include an early termination fee that will need to be paid if you want to cancel your contract. This is usually around 50% of the total rental cost remaining.

Leasing a new car when your current lease ends

Most people move onto a new lease deal when their current one ends. After all, this is one of the perks of leasing – the ability to get behind the wheel of a new car every few years in a cost-effective manner.

When you get towards the end of your lease, your provider will almost certainly give you a call to discuss your options going forward. If you go for a new lease with the same company, you can even arrange for your new lease car to be dropped off the same day your old one is returned.

If you’re considering a new lease, one of our special offers might be perfect for you.

Get all the help you need with Hippo

We’re here to help you with every part of your lease from start to finish.

If you’re about to begin your leasing journey, take a look at our latest car leasing deals.

If you’d like to speak to someone, we’re only a phone call away.


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