Avoiding charges at the end of your leasing agreement
Whether you are a single owner car or van operator or operate a fleet of vehicles, it is likely that you have considered leasing for your new vehicle. Car & Van Finance Direct provide a guide to avoiding charges at the end of your car leasing or van leasing agreement.
Vehicle leasing agreements
Leasing is a very effective and economical way for both business users and personal users to operate new vehicles, however you do need to be aware of the potential drawbacks at the end of a leasing agreement, so you know what to avoid. You may have heard some of the horror stories regarding extra charges the end of leasing agreements, these mainly regard penalties for exceeding the pre-agreed mileage limit or there’s damage charges.
These things need to be agreed at the start of the leasing contract, leasing is just another way of financing your vehicle and is available in a number of different forms:
One of the most popular, you are provided with a vehicle for a set period of time, but never actually own the vehicle itself. Usually a monthly rental plan is set up for the length of the contract (between 2 to 5 years) and at the end of this term the vehicle gets returned to the vehicle finance company.
Contract hire is available for both personal and business users at Car & Van Finance Direct and is available on both cars and vans.
This is slightly different to contract hire and is only available on vans. As is the case for contract hire, you agree a mileage at the start of the contract but instead of handing the van back at the end of the agreement, you have a sell your van to a third party to cover a final payment.
This final payment is based on the estimated age and worth of the van at the end of the contract, with no excess mileage charges as such, however if you do exceed the mileage significantly, then it is likely your van won’t be worth enough to cover the final payment and you will be left out of pocket.
End of contract
At the end of the contracts you are either required to hand the vehicle back (contract hire), or sell the vehicle to a third party (finance lease). If you have a vehicle on contract hire, the finance company will arrange a collection date to come and collect the car or van. If you have a van on finance lease, you have to arrange to sell your van privately before an agreed date.
As discussed, there won’t be any excess charges with a finance lease agreement, extra charges will only be if the proceeds from selling the van are less than the final payment agreed at the start of the contract.
At the stage where you receive a quote on a new car or van, we will ask for your anticipated mileage, the monthly rental figure is based on this mileage. With contract hire, if you exceed this mileage over the term, then excess mileage charges will occur.
The severity of this charge will depend on the vehicle, with costs varying between vehicles. Make sure you are aware of your excess mileage charge when you begin the contract, for example a charge of 8p per mile will cost you £80 if you go 1000 miles over the agreed figure.
Make sure you keep the car or van in good condition for both finance lease and contract hire agreements. There’s no damage costs for finance lease, however it is again likely to affect the final selling price of the van. With contract hire however there are charges for any damages deemed more excessive than general wear and tear throughout the contract.
Finance companies don’t expect the vehicle to sparkle as if it is new at the end of the term and the BVRLA code of conduct is there to protect both consumers and vehicle finance companies. Ensure the vehicle appears in a good condition for its age, minor stone chips are usually ok, however if there is substantial damage to the vehicle such as scratches or dents it Is better to take it to a specialist to get it checked and have any work that is needed carried out. We’d also suggest a valet which can remove light body marks such as scuffs and get the vehicle nice and clean both inside and out.
New vehicles on finance
Looking for a new vehicle on finance? Car & Van Finance Direct are here to help! We have a massive range of new car deals and new van deals available with cheap vehicle finance options to suit your requirements. Simply fill in a contact form or call us on 02920 789234 to get the ball rolling on a brand new car or van today!