Your End Of Lease Options When A Car Leasing Contract Ends.
There are various types of Car Leasing Contracts and, depending on the type you have, you will be faced with a number of options when your Lease Car agreement comes to an end. An important decision needs to be made at this point, so you should be considering your available options in good time before your current lease car is due to be returned.
Whether you chose Business Car Leasing or Personal Car Leasing when deciding to lease a car, it’s most likely that you will have either a Contract Hire or a Contract Purchase agreement covering your lease car. There are other types of Business Car Leasing options, and these are Finance Lease and Lease Purchase.
As your End Of Lease approaches, keep in mind the Fair Wear And Tear policy of your leasing company, and make sure your lease car is in good condition in order to avoid De-Hire Charges. Check out our article on How To Avoid End Of Contract Charges.
End Of Contract Options
1) Extend Your Car Leasing Contract
With Contract Hire and Contract Purchase, most leasing companies will allow you to extend the term of your contract by 6 or 12 months. However, there’s no guarantee that your monthly rental will remain the same, especially if you have exceeded the agreed contract mileage. It may go up, or even go down, but this is at the discretion of the leasing company.
Extending contracts can be very convenient for a number of reasons:-
- You may not be in a position to sign up for a new 2 or 3 year lease
- You may not be confident in future business or the economy
- You may not be able to raise the initial payment for a new lease
- You may be undecided on what vehicle to have next
- You may have ordered a new car which will take a few months to arrive
2) Purchase Your Lease Car
With a Contract Purchase agreement, you have an option to purchase your lease car at the end of lease and a pre-determined ‘balloon’ payment which you can make to gain ownership. The balloon payment is the figure given to you at the start of your agreement, which must be paid at termination if you wish to own the vehicle.
With Contract Hire, even though you don’t have an automatic right to purchase, and you’re not given a balloon payment at the start of your contract, you may still have an option to buy and can request a purchase price at end of lease and most leasing companies will happily provide one. If they offer you a purchase price, it is usually not negotiable as they already have the vehicle underwritten.
Buying your lease car could be one of the best End Of Contract options for you because:-
- You know the car extremely well as you’ve had it from new
- Even if you don’t keep it yourself, you can sell it or pass it on to a family member
- The final balloon payment may be less than what you could sell it for
- It could last for many more years, if it is in very good condition and low mileage
3) Return The Lease Car
With both Contract Hire and Contract Purchase, you can simply hand your lease car back at end of contract with no further payment or commitment. Many people choose this option and arrange a new car leasing contract, so that their new lease car is delivered on the same day as the old one is collected. One of the benefits of leasing a car is that you can drive a brand new vehicle every two or three years without any of the hassle of disposing of your old car or worrying about depreciation.
All Contract Hire and Contract Purchase agreements are fixed term and legally binding, so Early Termination could be costly.
This means that if you wish to terminate one of these types of leasing contracts early, you are likely to have to pay a settlement figure in order for the leasing company to release you from the remaining contract period. The figure varies according to how much time remains of the lease, and also between leasing companies, who each have their own policies regarding early termination.
Check out our article on How To Get Out Of Your Car Lease Contract for further information.
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