There are many benefits to take advantage of when you lease a car or van from Flexed – flexible contracts which allow you to increase or decrease the length of your lease term whenever you wish, affordable fixed monthly payments, mileage that can be tailored to suit your individual needs and with short term flexible leasing, you can drive the car of your choice for a period of time and swap to a different make and model if you’re on a 28-day rolling contract.
Yet despite all these amazing benefits associated with vehicle leasing, many customers are wary about switching to leasing because they’ve heard about sizable end of contract charges which causes some concern.
Here at Flexed, we want our customers minds put at ease when it comes to leasing and all this talk of end of contract charges, so we’ve put together a simple guide that explains what they are and how you can avoid being issued with extra fees to pay when your lease agreement comes to an end.
End of Contract Charges – What Are They?
These are extra charges or fees that your finance provider will issue if necessary when your lease agreement ends.
End of contract charges may be issued if your lease car or van is returned in poor condition compared to when it was leased to you – the BVRLA Fair Wear & Tear guide is used to determine whether or not the vehicle is in good condition. Any damage found not covered by this guide and not repaired by yourself could lead to end of contract charges.
You can also be charged extra fees at the end of your contract if you’ve gone over your agreed mileage allowance, this is known as Excess Mileage.
And if you wish to return your vehicle sooner than your agreed date, you will be expected to pay end of contract charges – this is known as Early Termination.
Fair Wear & Tear Explained
Once your contract comes to an end and the vehicle is ready to be returned, your lease car or van must be in good condition both inside and out upon inspection.
‘Normal’ fair wear and tear is acceptable, however any damage found that is not classed as being covered under the BVRLA Fair Wear & Tear guide will mean extra charges to pay at the end of your contract.
Your own finance provider will expect you to follow their fair wear and tear guidelines which tend to be based around the BVRLA’s general guide.
It’s advisable to carry out your own thorough inspection of your lease vehicle before it’s due to be returned. Inspect all the bodywork, paintwork, bumpers and trims and check the windows, lamps and door mirrors for cracks.
Both sets of keys and handbook/documentation that came with your lease vehicle must be present and the equipment and controls be in good working condition.
The wheels and tyres should be checked for damage and the overall mechanical condition of the vehicle should be spot on.
The interior should be inspected for any damage, whilst the seats checked carefully to ensure there are no stains, rips or burn holes.
Any damage not covered by the BVRLA fair wear and tear guide should be repaired by yourself using an approved garage before the vehicle is returned so as to avoid end of contract charges.
Looking after both the interior and exterior of your lease vehicle whilst in your possession is the best way of avoiding penalty charges at the end of your contract.
Excess Mileage Explained
As part of your lease agreement, you’ll be asked what annual mileage allowance would suit your needs and based on your figure this will be calculated into your monthly payments – so the higher your mileage allowance, the greater the cost will be added to your monthly payment.
If you exceed your agreed mileage allowance, you will have to pay a fee at the end of your contract based on how many miles over you have driven.
Basically, the more miles your lease vehicle shows on the clock, the greater it’s depreciation is and this is all accounted for when you take out a lease contract, so exceeding your agreed mileage allowance means you will have to pay extra at the end of your contract.
The excess mileage rate varies depending on your chosen finance provider but as an example, if your agreement states that any excess miles will be charged at 3p per mile and you cover 2,000 miles more than you should – your excess mileage charge would be £60 payable at the end of your lease term.
Early Termination Explained
If you decide to return your lease vehicle before the agreed end of contract date, this is known as an early termination of your contract and end of contract fees may be charged by your finance provider.
At Flexed, if you wish to cancel your 28 day contract, you must provide two weeks’ notice to the intended date of return. However, if your contract with us is fixed and you wish to terminate your agreement earlier than the date set out on your signed agreement, you may be charged an early termination fee.
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