How to avoid end-of-contract lease charges with PCH

  • Stay below pre-agreed mileage limit
  • Keep the car in good condition
  • Remember to service the car on time

Leasing, or Personal Contract Hire (PCH), is well established as a simple and elegant solution for people who want to drive a new car. And better still, it usually provides the cheapest monthly payment of any type of car finance.

PCH effectively works like a form of long-term car rental. You put down an initial payment, stump up a set of fixed monthly payments, then before you know it the agreement is up and it's time to find a new car.

This means you don't own the car. So like when you rent a car on holiday, it's your responsibility to make sure you return it in good condition. Failing to do so can you land you with a big bill.

Charges are often issued if the car (or any accessories that came with the car) is not maintained in the way agreed in the contract. The reason leasing companies follow this to the letter is that they need to recoup any money lost in fixing a car that they are ultimately going to sell on.

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How to avoid leasing charges

Fear not, though, because it’s easy to avoid these charges if you look after your car and know what your responsibilities are when you pick up the keys.

Personal leasing: what can I be charged for?

End-of-contract charges cover everything from exceeding the mileage allowance stated on the contract and failing to service the car on time, to causing physical damage beyond fair wear and tear.

But these aren’t the only additional bills you can face. Below are the most common charges – all of which you can avoid by taking good care of the vehicle from day one and doing a little preparation:

> Excess mileage charges
> Physical exterior damage
> Physical interior damage
> Missed servicing
> Missing service history
> Missing spare keys

Most common of these must be charges issued for going over the pre-agreed mileage allowance.

>> How to avoid excess mileage charges

How can I avoid these personal lease car charges?

Organise yourself before signing the contract and check the documents when you take delivery of the car and there’s no reason you should have to pay any end-of-contract charges.

Odometer

Before you sign the contract make sure you’ve read it thoroughly to understand what your duties are – these can vary depending upon the leasing company. If you don’t understand anything, be sure to clarify these details with the company – it has a responsibility to help you understand your obligations, too.

Helping to avoid unexpected fines, reputable leasing companies should spell out exactly what they expect from you in the documents provided with the car. It’s a good idea to highlight important details in these documents and put them somewhere you can find them when needed – in the glovebox could be a good idea, so they’re always to hand.

>> How to bundle insurance and leasing costs into one payments

Fair wear and tear is acceptable, notable interior and exterior damage is not

There’s no point tearing your hair out for months about minor damage to your car – most leasing companies will turn a blind eye to small marks. If the company you’re leasing through is a member of the British Vehicle Rental and Leasing Association (BVRLA) it should follow the organisation’s fair wear and tear rules.

Car lease: wear and tear

This means that the company will expect to see normal evidence of use for the car’s age – if you’re returning it after a two-year, 5,000-mile-per-year contract it should still look pretty new. If, however, you’re handing the car back after a four-year, 120,000-mile contract then wear to the seats, and a steering wheel worn smooth from years of use are likely to be perfectly acceptable.

To avoid any damage charges, therefore, take care when parking – especially if your car has particularly large alloy wheels. Big scrapes to the wheel from bumping along the kerb or chunks taken out of the tyre through clumsy parking are likely to lead to a bill.

You’ll want to check how much tread is left on the tyres, too. If they’ve worn below the legal limit – most tyres have rubber bars in the gap between the tread to show you the minimum tread depth – get these replaced before handing the car back to avoid a charge.

Similarly, noticeable dents on the panels or large scrapes are likely to see you issued a charge. If you’re not the most confident parker and your previous cars have been covered in battle scars, it may be worth getting a car with at least rear parking sensors to save you end-of-contract fines.

Keep car interior fresh and clean to avoid end-of-contract bills

Don’t forget about the interior. Tears to the seats and dried-in Ribena stains are just as likely to put a dent in your bank account come handover time. The same goes for unpleasant smells.

If the car reeks from years of smoking behind the wheel, you can expect a bill from the leasing company, as it will likely want to freshen-up the car before sale. This is equally true for e-cigarettes as traditional ones, so don’t think that you’ll be fine just because you vape.

>> How to clean your car

Missed servicing and missing service history could cost you

It’s not just how good the car looks when you return it, the leasing company will want to make sure it has been serviced on time, every time, by a reputable dealer, as if it hasn’t this is likely to reduce its resale value.

Car servicing

Many cars have set servicing intervals, while others have variable intervals that flag up on the car’s trip computer, as and when needed. Ensure that you get the car serviced on time and you shouldn’t have to worry about post-contract fees.

Forget completely or get the car looked at late, however, and the leasing company may issue a charge, as cars with an incomplete service history are worth less than those with evidence that they’ve been looked after.

Returning lease car: absent spare keys could mean a fine

Every new car comes with more than one key, and typically you can expect to get two keys with your new lease car. Return the car with just one, however, and the leasing company is likely to charge you for sourcing another.

Spare keys

Most drivers only ever use one key and put the other somewhere safe. Sadly, somewhere safe is often somewhere hard to remember, so it’s worth making a note on your phone and potentially leaving another with the lease contract to remind you where to find it.

Forget to return the second key – or if you simply can’t find it before the car’s being collected – and you can expect to be sent a bill for more than £150 to source a new one.

What else should I remember before returning my lease car?

You may not plan to clean the car before the lease company collects it, but if it’s so filthy that the inspector taking it away can’t establish whether there are any dents or scrapes, they’re likely to bill you for getting it cleaned and/or coming back at another time to inspect when it’s not so dirty.

Similarly, you’re unlikely to want to brim the car with fuel before it gets driven away, but if there’s so little fuel that the first thing the inspector has to do is find a petrol station, you may be issued an additional fee. A quarter of a tank should be adequate.

Dirty car

It's wise to make sure you can spare a little time when your car’s being collected. If the inspector flags anything you’re likely to be charged for on their notes, it’s much easier to challenge this in person when you’re both in front of the car.

You’ll have to sign a form to confirm the condition report they’ve produced. So being able to challenge anything you disagree with at this stage will give you much more power to question any fees you think are unfair than at a later stage.

Should I fix any damage before the lease car is collected?

Drivers are free to get any damage beyond wear and tear fixed professionally before returning their car. Depending on the cost of fixing things yourself, this could save you money compared with the leasing company’s standard charges.

Car repair

To establish the best option, you may want to ask your leasing company how much it would charge for a scraped alloy wheel or a big dent – or whatever damage your car may have – so you can compare that with getting it repaired yourself.

Bear in mind, though, that you’ll have to get any work carried out to a professional standard with a full, transferable warranty to be sure that charges won’t still be issued by the leasing company.

How will I know if I need to pay end-of-contract lease charges?

If the leasing company intends to charge you for any damage or missing documents/equipment, it must inform you what it intends to charge within four weeks of receiving the vehicle.

If the leasing company is a member of the BVRLA, it will have to provide a breakdown of all the charges, an explanation of how these were calculated and photo/video evidence to prove the extent of the damage.

End of lease charges

You are able to challenge these charges if the company is a member of the BVRLA and should you dispute the condition of the car when returned, you have the right to pay for an independent qualified engineer to examine the evidence. This expert’s judgement will be final and should they find in your favour, the leasing company will have to refund the cost of having the evidence assessed.

Further reading

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