How to Return a Car at the End of a Lease

Plan Ahead to Avoid Lease Turn-In Charges


You've driven your leased car for two or three years now, and it is time for the lease to come to an end. If it's your first leasing experience, you're probably wondering about the return process. Carmakers have developed programs to let people know the lease is winding up and help them prepare for the return, but here are some real-world tips that will make the task even easier for you.

The Lease Inspection

Most people know that leasing companies charge for any damage to a vehicle that it considers to be more than normal wear and tear. They do this to maximize the vehicle's value for the next sale by spending as little as possible for reconditioning. But who defines "normal" wear and tear? What damage falls into the "you're going to have to pay" category? Here is where the inspections come into play.

Although there is some variation in the process, a lease return typically starts about 90 days before the end of the leased car contract. The leasing company (technically called the "lessor") will contact you to let you know your lease contract is coming to an end. It will then contact you to set up an appointment for an inspection. Any damage that's going to cost more than an average amount of money to refurbish is called excessive wear and tear.

Many manufacturers use an independent company to conduct the vehicle inspection, which is free for the car leaseholder (technically called the "lessee"). The inspector will come to your home or office, and the process takes about 45 minutes. A pro tip: Be nice to the inspector. Is it hot out? Offer some water. Is the inspector doing the job at your workplace? Pick up the cost of parking. Your courtesy could come in handy if the inspector has leeway in deciding whether a bit of damage could pass.

Most manufacturers look for damage in these general categories:

  • Dents, dings, scratches and scrapes on the exterior, bumpers and wheels, especially "curbed" wheels
  • Cracks, stars or excessive pitting in the windshield and other windows
  • Abnormal or excessive wear on the tires
  • Tears or stains on the upholstery that can't be repaired or cleaned with normal refurbishing

Inspectors typically measure the size and depth of dents and scratches and enter this information, and other problems, into a computerized template that estimates the cost of repair. At the end of the inspection or shortly thereafter, you will receive a condition report that lists any damage above the typical wear and tear and what it costs to fix the problem.

During this time of the COVID-19, some automakers might skip the pre-inspection to speed things up and reduce contact. In these cases, the inspections are done after the fact, and there's a chance that any excess wear and tear items will be assessed later. If you plan on leasing from the same automaker again, we suggest asking to have these fees reduced or waived as part of your negotiation on the new car.

Prepare for the Car Lease Inspection

Most manufacturers' websites provide specific information about the end-of-lease process and a detailed definition of wear and tear, which also is called "wear and use." Toyota Financial Services created a lease turn-in site so people can better understand what will happen and see what kinds of damage will incur a charge.

For example, inspectors for Toyota look for any dents or scratches that are bigger than an area that can be covered by a credit card. They don't charge customers for wheel gouges smaller than an inch or normal tire wear.

Before the inspection, experts recommend removing all personal items and washing the vehicle. You don't have to spend hundreds of dollars, but a detailing job might also be a good idea. It's definitely to your advantage to present your car in the best light you can.

It also might be the time for some touch-ups.

Are there light scratches? Some cut only through the outer layer of paint called the clear coat. A thorough detailing can sometimes eliminate these scratches. If a scratch is deeper, and you are pretty sure the manufacturer will charge you for it, buy a small bottle of touch-up paint from the manufacturer's parts department. The experts suggest using a thin-bristle brush from an art store, not the thicker brush that comes in the touch-up paint bottle.

A number of independent paint product companies, such as Dr. ColorChip and Langka, also have products that can match original manufacturer colors. If you carefully follow the directions, you can get good results.

If your automobile has multiple small dents that haven't broken the paint, you can call a paintless dent remover. Sean McMullan of dent remover Crayford Coachworks in Los Angeles says he does a lot of pre-lease-return business. Owners who are about to wrap up a car lease come to him to remove all manner of dents and dings. He estimates that his fees are about a third of what a body shop would charge for the same repair.



A Second-Chance Inspection

As you can see, having the inspection performed well before the end of the lease increases your chances of saving some money. However, if you have an initial inspection and the manufacturer's charge for the repairs seems reasonable, consider just paying up and saving your time.

If you decide to do some fixing up, most leasing companies will allow you to schedule a second inspection. The inspector will check the vehicle over again and verify that the repairs were done properly.

Pick a Dealership for the Return

In theory, you should be able to return the leased car to any dealership of the same brand. But in practice, you'll find that some dealers might be hesitant to take on an extra piece of inventory they hadn't planned on. If you want the smoothest experience, go to the same dealership from which you bought the car. If you've moved or the dealership is no longer in business, you'll obviously have to choose another one. Call the used-car manager to set up an appointment for the lease return. If you get the feeling your lease return won't be welcome, it's best to move on to a friendlier dealership. But if you have no other option, stand firm and ask to speak with the general manager. 

Give Back What You Got

Remember to locate all the things that came with the car and bring them to the lease turn-in. For example, many people forget to bring the second set of keys they received when they leased the vehicle. Other pieces to return include tonneau (cargo) covers, the original floor mats, spare tires, and even third-row seats that were perhaps removed and stored in the garage.

Other Lease-End Tips

Contesting excessive use charges: If the excessive-use findings on a lease-return condition report seem out of whack, you have the right to contest them with a representative from the leasing company. While you might not get all the penalty fees removed, it's likely you could knock them down. This approach is particularly effective if you are going to lease your next new vehicle from the same maker. The manufacturer might waive the cost of some or all repairs and fees if you remain loyal to the brand and lease another vehicle. The same may apply if you have gone over mileage limits for the vehicle.

Getting a lease extension: If you run out of time to take care of repairs or you haven't yet found a replacement vehicle, you can request a lease extension. Keep in mind that if you choose to extend your lease, you'll likely have to pay for another year of vehicle registration even if the extension is only for a month. This shouldn't make it a deal-breaker, but make sure to factor that into your calculations and check with your state Department of Motor Vehicles on exact fees.

Sell Your Leased Vehicle for a Profit: There are times when the leasing companies underestimate the value of a vehicle at the end of a lease. If your vehicle has been well kept and is well under the allotted miles, it may be worth getting an instant trade-in offer to determine its value. If your vehicle appraises for more than the residual value listed in the contract, the remaining balance is yours to keep. Read "3 Ways to Turn Your Lease Into Cash" for more detailed information.

Deciding whether to buy the car: If the odometer indicates that you have gone way over your mileage limits or if you have truly excessive wear and tear, you may have reason to think about buying your leased car. When you do what's called a lease buyout, you will not be penalized for going over your allotted mileage or having a dent in your fender. Factor in those penalties when you're deciding if buying your leased vehicle is the right move, but also take into consideration other factors, such as the vehicle's residual value.

By planning ahead and knowing what the inspectors will be looking at, you can reduce turn-in expenses — or at least be ready to deal with them when the time comes.

FAQs

Is it worth buying a car at the end of a lease?
Buying your leased car can be a very convenient way to break the cycle of leasing. It removes the search process for a new car, and you already know how well it was taken care of since you've been the only owner. Keep in mind, however, that any payments you've made so far will not apply toward the purchase of the vehicle.

What can I expect at the end of my lease?
Expect to have your vehicle inspected near the end of the lease term. You will be charged for any excessive wear or overage on the allowed miles unless you choose to buy the car or negotiate that the dealer waive those fees as you lease another vehicle.

How does a car lease work at the end of the lease?
All leased cars have a termination date on the contract, which is usually about 36 months from when you bought it. Near the end of a car lease, you have the option to buy it, lease another one, or walk away after turning it in. Any dealership of the same brand will determine if you've gone over the allotted miles or if the damage is beyond normal wear and tear, then bill you if needed. You can ask to have the fees waived if you plan on staying loyal to the brand and leasing or buying another vehicle.

Do I have to turn in my leased car to the same dealership?
No, you do not have to turn in your leased car at the same dealership, but we do recommend it. Some dealerships have been known to turn people away if you're not buying a car from them. If you do plan on buying a car, however, a dealer will be much more motivated to process your expiring lease.