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What Should I Expect When I Return My Leased Car?

The clock is ticking down. That 2- or 3-year lease you thought was far in the distance is now ending. How do you know? Probably due to the huge number of phone calls, emails, and snail-mail flyers telling you that your vehicle needs to be returned. But along with reminding you about your impending lease return, they’re dangling the bait with the latest models in an attempt to draw you into a new lease or purchase. Here’s what to expect:

Promises made, promises kept

When you signed up for your vehicle lease, you committed to a preset lease length and the amount of mileage you promised not to exceed. In addition, you promised to take care of the vehicle avoiding curb rash, parking lot dents, and other damage while having it serviced regularly. Now it’s time to pay the piper. How did you do on your promises?

If you took great care of the vehicle and are under on mileage, you’re in luck. Currently, there’s a huge demand for used vehicles, and as a result, your vehicle may be worth more than the originally agreed-upon residual vehicle value. This could mean money back to you or an allowance on your next vehicle.

The first step is to contact the dealership leasing office and find out what they’ll do for you. Remember, you don’t have to take your vehicle back to the original dealer. You have options. If you don’t like what they’re telling you at one dealership, take your business elsewhere.

Assessing your options

When returning a leased vehicle, there are three options: lease a new vehicle, buy a replacement outright, or simply return your current leased vehicle. Each choice comes with an assortment of things to do:

If you lease a new vehicle, you won’t need to do have a rigorous inspection of the vehicle you’re turning in and will avoid any disposal fees. You’ll still pay for excess wear and tear or if you’ve exceeded the mileage cap. However, the dealer may grant you a bit more latitude to seal your next lease. Remember, everything is negotiable if you’re leasing/purchasing a new vehicle.

If you buy a new vehicle, the previous requirements with regard to starting a new lease will apply and again, no disposition fee.

If you simply return your vehicle, you’ll have to go through an inspection, often conducted by an independent contractor, pay excessive mileage penalties (charged at usually between 15-25 cents per mile, i.e., 10,000 miles over can cost you more than $2,000), wear and tear chargebacks and a disposition fee of around $350. This last fee is basically a “restocking” fee the dealership charges.

What’s reasonable wear and tear?

Most dealerships are fairly forgiving with regard to wear and tear. You can check online and find out what they consider allowable wear. Key things that inspectors look for when determining if you need to pay for wear/tear include:

  • Excessive tire wear, usually under 1/16th of an inch tread depth.
  • Wheel scrapes larger than  two inches in diameter.
  • Dents larger than a credit card
  • Scrapes and scratches longer than three inches
  • Chips or windshield damage larger than a quarter

While policies vary, most dealerships will allow between $500-$1,000 for wear and tear. While that may seem like a lot, know that paint damage is extremely expensive to repair. If you have a dent that has cracked the paint revealing either primer or metal, you’re probably talking about at least a $500 repair. A scratch of five or more inches that has broken through the clear topcoat could easily reach $350. Additional color blending of surrounding panels can push your repair over $1,000.

Spruce up your lease return

One way to avoid excess wear and tear charges is to spruce up your return before the inspection. If you scraped your alloy wheels, causing damage you believe is above the lease-allowed threshold, there are repair services that can help repair them and save you money in the long run. To make it that much easier, there are mobile services that will come to you and complete the repair in your driveway.

Dent-less paint repair technicians can repair dents and dings for a very reasonable cost. If the dent has not broken the paint surface, these folks do magical work restoring most bodywork dents to arrow-straight perfection.

Touch up paints that will match factory colors exactly can repair scratches that are deeper than just the clear topcoat. You can order these paints by the vehicle model year and paint code, so you know they’re exact.

If you have large cracks in your windshield, get ready for an expensive repair, especially if your vehicle has options such as rain-sensing wipers or auto high beam headlight dimming. But if you have a chip or small “star” in your windshield, there are windshield repair kits that allow you to fill not only the chip but those pesky little cracks that creep out from the impact point. Quick tip: The best time to repair a chip is right after it happens, so jump on them early.

What about tires?

Factory tires will usually last the length of a 2- to 3-year lease. If you’re a certified used re-lease customer, the tires could become worn further than is acceptable. Most of the time, you really don’t need to chase new tires for two reasons:

  • The dealership may have a better replacement price than the local tire store.
  • They may not like the tires you purchase, so the effort would waste time and money.

If your tires are worn beyond what you think is a safe amount, take the vehicle to the dealership and ask them to give you a price for replacement tires. In addition, find out the exact make and size of the tire they have in mind. If you think you can beat their price, take it to the local tire store. Make sure the cost the local tire store quotes includes dismounting and recycling your old tires along with mounting and balancing your new tires. Unless the local tire store pricing results in big savings, the dealership is a less stressful alternative.

Lease returns don’t have to stress you as long as you take care of your vehicle every day you drive it, have it serviced regularly and keep it clean. You can help ensure it remains in good shape through regular maintenance, parking in areas that are well-lit, and driving defensively. Even though leasing is just a long term rental, treating the car as if it’s your own will pay dividends when it’s time for its return.

Cam Benty
Cam Benty served as editor-in-chief for a number of automotive and sports-related publications early in his career, including Motor Trend Specials, Hot Rod and SPORT Magazine. After 20 years of experience creating monthly publications, he changed it up a bit, building custom publishing inserts and full-length specialty magazines for major car companies,including Ford, General Motors and Honda. A... Read More about Cam Benty

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  1. I am about to Lease a car for the 1st time! On the Lease agreement, there is a Residual Value… I would assume the option to buy out at end of lease? if so, does the Dealer have to honor that price at EOL even if car is worth more?

  2. I intend to buy my Civic Si Coupe in December. Is there any pitfalls I should look for during this transaction. I realize in Texas I have to pay sales tax again on the residual value, but what other charges will I have? Can I deal with the leasing company direct and avoid extra charges by the dealer?

  3. A fourth option, that most people don’t seem to understand, is to sell your vehicle outright. If your vehicle is worth more than the residual value, you can sell the car and keep the difference. Most people just turn it in without realizing they are turning away $$. And you can be sure the dealership isn’t going to bring it up if you don’t.

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