Managing down end-of-lease charges

A common fear amongst those leasing a vehicle or fleet is the prospect of paying additional end-of-lease charges at the end of your agreement. Fortunately, there are simple things you can do to try and avoid these costs.

Familiarise yourself with our guide to end-of-lease charges – and tips for avoiding them – to enable you to sit back and enjoy the ride in your new vehicle, without worrying about further fees.

What are end-of-lease charges?

End-of-lease charges are additional fees, charged to you, to cover extensive damage to a vehicle. For cars, the BVRLA Fair Wear and Tear Guide outlines what is considered acceptable damage.

Typically, you won’t have to pay for minor scratches and damage to the vehicle, but anything above and beyond this is likely to result in a fee passed on to you.

Why are end-of-lease charges applied?

The forecast value (or residual value) of a vehicle at the end of a contract hire agreement takes into account an amount of depreciation from the new vehicle price. This residual value is based on the vehicle being returned in an appropriate condition for its age and mileage.

In a sale or auction, a car in poor condition won’t achieve its true value; the same applies here. Leasing companies carry the risk of depreciation for you, so end-of-lease charges exist to cover the loss in sale proceeds as a result of the vehicle being returned in a condition that impacts its value.

Reputable leasing companies, Hitachi Capital included, adhere to the BVRLA Fair Wear and Tear Policy. These guidelines identify the acceptable condition a car should be returned in to reflect its age and mileage. If you damage the car beyond this, it’s likely you’ll have to pay for the damage when you hand it back.

The end-of-lease process

At Hitachi Capital Vehicle Solutions, we use two independent companies to provide end of lease inspection reports. One covers cars and small vans; the other, specialist vehicles and lorries.

Their findings dictate the cost passed on to you. There is an expectation that cars will come back without major dents and scratches, whereas commercial vehicles will often be granted a little more leeway.

How can I avoid end-of-lease charges?

Our guide below outlines seven simple steps to reduce the likelihood of you facing end-of-lease charges.