What Happens At The End Of A Car Lease?
Source: Pixabay
Leasing a car is a common practice for consumers when looking for a new vehicle. A vehicle is most often leased from a dealership or a bank and is somewhat comparable to a long-term rental. You make a down payment at the start of a lease, then make regular monthly lease payments for the entirety of the lease term to keep the vehicle in possession. Most leases are 24 to 36 months long, but what happens at the end of a car lease?
When a consumer leases a vehicle, they are responsible for regular routine maintenance like oil changes and checkups. Consumers are typically liable for repair work, but since leased vehicles are almost always new, most are still covered by the manufacturer’s standard warranty. It’s critical to maintain the condition of the leased car since there might be penalties for excessive wear and tear, damage, or mileage.
Early termination of a lease can be costly, so be prepared to pay a substantial early cancellation fee if you choose that way.
What Happens at the End of a Car Lease, and What Are the Alternatives?
- Trade in the car for a new lease and begin the leasing process all over.
- Return the car and walk away without a new commitment.
- Purchase the vehicle being leased. This will require you to look carefully at the terms of the lease and evaluate the condition of the car to determine whether this option makes financial sense.
It’s Time to Trade It in for a Fresh Lease.
You may return to the dealership after your lease is over, turn in your leased automobile, and sign a new lease for a fresh new model. However, if you plan to lease another vehicle from the same dealership, you may be able to reduce the costs. Many dealerships will eliminate your previous lease’s disposal charge if you sign a new lease with them straight away, which is usually between $250 and $500.
In fact, if your lease is about to expire, you’ve probably already been hearing from the dealership. They could be providing special incentives to entice you to sign a new lease, such as waiving the last few months of your existing lease and allowing you to leave early. If you agree to sign a new lease with them, your lessor may even waive wear and tear costs.
NOT JUST FOR CAR SHOPPING
The CoPilot app isn’t just for buying a car - our new CoPilot for Owning tool will help you keep track of recalls and gives you advice on which scheduled maintenance tasks are most important.
Walking Away after Returning a Rental Vehicle
Maybe you’re moving to a more urbanized area or received another vehicle, or maybe you just want some more time to look for something new. While it might make sense, there are typically feeds to re-lease if it’s not immediate.
According to Credit Karma, in addition to additional return costs for mileage or damage, some car leasing contracts include a disposal charge, which covers the expense of reselling the vehicle. Also known as “turn-in fee,” it is payable at the end of the contract and typically costs a few hundred dollars as referenced above and is generally what happens at the end of a car lease unless there is a renewal.
If you don’t plan on leasing again, plan to pay the whole disposal charge, as well as any expenses for excessive wear and tear incurred as a result of exceeding the mileage restrictions set out in your lease. You’ll have to pay late penalties if you return your vehicle after your termination date.
Purchasing Your Vehicle at the Conclusion of Your Lease
The third alternative, often called leasing to own, might be tempting to a lot of drivers. Maybe you’ve unexpectedly fallen in love with the vehicle, or maybe you’ve damaged the car or exceeded your mileage limit, and it makes more financial sense to purchase it instead of paying the fines. It’s not always the best route to take since the worth of the leased vehicle at the end of the lease is based on its residual value and is specified in the lease contract.
HOW OFTEN SHOULD YOU REPLACE YOUR BRAKES?
Unless you’re a mechanic or super-dedicated car enthusiast, you might not know much about the brakes on your car. How long do they typically last? How often should you replace your brakes? We’ve got answers
What Happens at the End of a Car Lease and How to Prepare
The best practice of leasing is to return your leased vehicle to the same dealership where it was originally leased from. Many dealerships have sister or partnership locations, so if for some reason you aren’t able to return it to the original, this is a good thing to communicate ahead of time.
When you return the vehicle, a lease inspection will be performed before it is accepted back. The lessor’s inspector will be looking for excessive damage items like:
- Scratches or dings on the vehicle’s exterior.
- Windshield, moonroof, or other window cracks.
- Tires that have been subjected to excessive wear.
- Damage to the car’s interior, like burns or tears in the fabric.
Your lessor will schedule a lease inspection a few days or weeks before the day you plan to return your automobile. Before the inspection, it’s a good idea to have some minor touch-ups and have your car cleaned. When it’s time to return your car, don’t forget to include everything that came with it, including all of the keys, any original floor mats or extras, and the spare tire.
THE BEST CARS FOR COLLEGE STUDENTS
Whether you’re squeezing into a tight campus parking spot or hauling ten loads of laundry back home, these best cars for college students will get you, your friends, and your stuff where you’re going.
Buying vs. Leasing a Car
When it comes to getting a new car, most individuals have two choices: lease a brand new car or buy a new or used car with a car loan. Regardless of the path you take, you’ll be paying for your new vehicle on a monthly basis for the foreseeable future. However, deciding between leasing and purchasing is a difficult task, and there are common pros and cons.
Advantages of Car Leasing
- You will get the opportunity to drive a brand new vehicle with all of the newest amenities without paying in full.
- The monthly payments are less than if you had financed the vehicle.
- Because your automobile is new, it is almost always covered by a warranty.
Disadvantages of Car Leasing
- In the long term, it is more expensive than purchasing.
- You have driving limits, such as the number of miles you may drive each year.
- Because you don’t own the automobile, you don’t gain equity.
Many financial experts advise drivers against leasing a vehicle, but it can make sense for a lot of consumers. Just like any other car purchase, your own personal preferences and situation will play a factor in whether or not leasing is the right thing to do.
Get a Curated List of the Best Used Cars Near You
The CoPilot car shopping app is the easiest way to buy a car. Tell us what you’re looking for and we’ll search the inventories of every dealership in your area to make you a personalized list of the best car listings in your area.
Only looking for newer models? CoPilot Compare is the search engine for nearly-new cars. Only see cars five years or newer with low mileage — CoPilot Compare is the best way to find off-lease, early trade-in, and CPO cars.
The best part? CoPilot is built using the same technology that dealerships use to buy and sell their inventories, so we have more info on each vehicle than competitors. CoPilot doesn’t work with dealerships, so there are no sponsored posts or other shady practices — just the most info on the best cars. Check out our About Us page to see how CoPilot works.
