When you return a leased car, you typically do not get money back. In most cases, you will either owe money for various fees and charges or break even, depending on the condition of the vehicle, the mileage accrued, and the terms of your lease agreement.
Leasing is essentially a long-term rental, where you pay for the depreciation of the vehicle during your use, plus interest and fees. Unlike purchasing a car, you aren't building equity that could be returned to you at the end of the term.
Understanding Lease Return Scenarios
The financial outcome of returning a leased car largely depends on whether you're returning it at the scheduled end of your contract or terminating the lease early.
Scheduled Lease Return
At the end of your lease term, the primary financial considerations are:
- Excess Mileage: Your lease contract specifies an annual mileage limit. If you exceed this limit, you'll pay a per-mile charge for every mile over. These charges can add up quickly.
- Excess Wear and Tear: While "normal wear and tear" is usually permitted, significant damage such as large dents, deep scratches, cracked windshields, torn upholstery, or bald tires will incur repair costs. Leasing companies have specific guidelines for what constitutes excess wear.
- Disposition Fee: This is an administrative fee charged by the leasing company to cover the costs associated with taking the car back, inspecting it, and preparing it for sale. This fee is standard and is outlined in your lease agreement.
- Unpaid Fees/Violations: Any outstanding parking tickets, tolls, or other fees associated with the vehicle will need to be paid.
Potential for Money Back (Rare):
In very rare instances, you might receive a small amount back, typically if you paid a refundable security deposit and there are no charges to deduct from it. An overpayment on your lease account is also a possibility, though uncommon.
Early Lease Termination
Returning a leased vehicle before your contract ends is generally a costly decision, and it is highly unlikely you would receive any money back. The goal of the leasing company is to recover the remaining value of the lease, plus penalties.
- Early Termination Fee: A substantial fee will apply for breaking the lease contract ahead of schedule.
- Remaining Lease Payments: You will typically be required to settle the unpaid lease payments for the remainder of your contract term. This means paying for the months you won't even be using the car.
- Negative Equity: You may owe the difference between the outstanding amount on your lease and the vehicle's depreciated market value. Since cars depreciate rapidly, especially in the early years, this can be a significant amount.
- Other Charges: Excess mileage and wear and tear charges may also apply, similar to a scheduled return.
It's important to note that a leasing company might waive early termination fees if the scheduled lease end is less than six months away, though this is not guaranteed and depends on the specific lessor and your situation.
Common Costs at Lease End
To help clarify the typical financial outcomes, here's a breakdown of potential costs:
| Cost Type | Description | Applies to Scheduled Return | Applies to Early Termination |
|---|---|---|---|
| Excess Mileage | Charges for miles driven over the contract limit. | Yes | Yes |
| Excess Wear and Tear | Fees for damages beyond what's considered normal. | Yes | Yes |
| Disposition Fee | Administrative fee for taking the car back. | Yes | Yes |
| Early Termination Fee | Penalty for breaking the lease contract before the scheduled end. | No | Yes |
| Unpaid Lease Payments | Remaining payments on the lease contract. | No | Yes |
| Negative Equity | Difference between outstanding lease balance and current vehicle value. | No | Yes |
Preparing for Your Lease Return
To minimize potential costs at the end of your lease, consider these steps:
- Assess Mileage: Track your mileage throughout the lease term. If you're close to exceeding it, consider buying out the lease or exploring options to reduce extra miles.
- Inspect for Damage: Before returning the car, thoroughly inspect it for any damages beyond normal wear and tear. Repairing minor issues before returning the vehicle can often be cheaper than paying the leasing company's repair charges.
- Review Your Contract: Understand the specific terms regarding mileage limits, wear and tear guidelines, and disposition fees outlined in your original lease agreement.
- Clean the Vehicle: Presenting a clean vehicle can create a positive impression, though it won't waive significant fees.
- Gather Documentation: Have all necessary paperwork, including maintenance records and your lease agreement, ready for the return process.
In conclusion, while it's extremely rare to receive money back when returning a leased car, proactive planning and understanding your lease terms can help you avoid unexpected charges and ensure a smoother return process.
