You’ve had your vehicle for several months, you’re about to complete your payments and that lease end is approaching quickly. You might be lost on what to do next or how to prepare, you are not alone. Many people are usually not very clear about what is going to go down. Read on for more on how to return your lease and tips for your lease end.
Things you need to now before you return your leased car
As the lease end approaches, there are several things you may start to think about. What are you going to drive next? Is it a good option to buy the vehicle once the lease is complete? Are there any potential charges that you may encounter at lease end? These are all important questions that we will help you answer and guide you through. Remember, the lease end process isn’t just about turning in the vehicle. It is a delicate process that could be expensive if not done correctly.
Charges that you should be expecting at lease end
Some of ht charges worth discussing are excess wear, mileage overage, disposition fees and late charges. Read on as we tackle each of these individually.
Before you hand in your vehicle, it might do you good to conduct your own inspection and examine it for any dents or scratches. If you find any present, get a professional to repair the damage before you hand in the vehicle. Your tires must form part of this inspection. Treads that are less than 1/8 inch will attract even costlier tire replacement charges at the dealership.
To avoid excess wear and tear, many companies set mileage limitations. Because these limits vary, there isn’t a standard to the limit. Exceeding the mileage coverage limit will attract penalties that vary from dealer to another.
Mileage allowances on lease cars are typically set to several thousand per year or for the entirety of the lease. For example you might have a mileage allowance of 12500 miles yearly or 37500 miles for a 3 year lease.
Likewise, the charges for the penalties for exceeding the limit vary depending on the dealer. The charge is set at a certain amount for very additional mile beyond the limit.
TIP: The more luxurious your vehicle, the more expensive the penalties fees applied. This ensure luxury vehicles maintain their value.
Most people forget about this charge, or didn’t even know about it to begin with. This fee is charged to anyone whose lease is over but doesn’t buy the car. You can expect to pay up to about 400$. Make sure to go over your contract and take down what you will be charge in disposition fees, to avoid being overcharged at the end.
TIP: Nowadays the fee is indicated on the front page of the contract so it should be easy to find.
Lease end and your credit
Every time you make lease payments, depending on your lease terms, the dealership notifies credit bureaus. Such payments with each of your creditors influence about 35% of your score. An unexpected change to your current situation like an early buy out, or early lease termination has the potential to impact your credit score.
If you decide to make such changes, it is important that you make all your payments on time as late payments have the capacity to influence your score by up to 110 points. Returning a lease is relatively safe to your credit score unless you fail to pay the lender any remaining monies.
Returning a lease may influence your credit
Check your Credit reports for reporting errors once you pay off your car lease. Sometimes, a lender might take too long to process your final payments, or make a mistake with the credit reports. This could reflect late payment on your credit reports and damage your credit scores.
If you happen to have inaccurate late payments reflecting on your credit report, then you must remedy the problem immediately. Thanks to the Fair Credit Reporting Act, you can check credit bureau reports for free once a year for any credit reporting errors. This way, your credit is safe from unjust penalties due to lender errors.
Other lease end tips
Some of the expenses that come at lease end can be avoided by paying attention to your vehicle. Here are some tips to help you survive the inspection before you officially hand in the car.
Instead of waiting for the excess wear charges, you can touch up some parts of the vehicle to lower or eliminate the charge. Tires, glass or bumpers are easily replaced.
If your tires have less than an inch of tread left or have spider cracks on your windshield, it would probably serve you best to fix them prior to the inspection. You don’t have to sweat about minor scratches, but take care of major stains and evidently out of shape vehicles.
Consider wear and tear insurance
Yes, it is actually a thing. If you know you will inevitably wind up with stains, scratches or dents, then wear and tear insurance might do you well.
You might find such insurance where you lease your vehicle or elsewhere. Be careful with the price set for such insurance at dealership, or you might end up paying an unreasonable amount as premium.
Try and keep your mileage in check
If you know you will be spending a lot of time of the road, you could purchase extra miles from the lessor beforehand. They cost less than what the lessor charges as penalty per ever exceeded mile.
What are your options?
Once your lease ends, you have the option to walk away, trade in the vehicle or purchase it. Each of these has its own repercussions and benefits. Trading in or purchasing the vehicle could be positively influenced if you have equity.
Walking away will mean that you pay the disposition fee. Regardless of which option you choose, don’t make the decision at the dealership. As lease end approaches, think about what to do next. Consider all your options and do research on what your car is worth and how you want to proceed.
Returning a leased car is a lot of work. These steps should help guide you through the process and hopefully make the process much easier.