What Happens at the End of a New Car Lease?

The Lease Return Process

When your new car lease concludes, it's time to return the vehicle to the dealership. At this juncture, you have two primary options: enter into another lease or walk away. Regardless of your choice, the vehicle will undergo an inspection, which can be a complex process. Each dealership has its own approach to handling lease returns.

Dealership Inspection Procedures

Some dealerships simply thank you and let the leasing company handle the post-lease inspection, including contact, negotiation, and billing for necessary repairs. Others perform the inspection themselves and report directly to you.

What to Expect in the Inspection

The lease contract stipulates that you are responsible for any damage beyond normal wear and tear. However, this term is often ambiguous and open to interpretation, varying between leasing companies. Generally, minor nicks and scratches are overlooked, but significant body damage or vandalism will incur charges at full retail price.

Preparing for the Inspection

To avoid hefty charges, it's advisable to prepare your vehicle for the inspection. You can often find more affordable repair options by shopping around. Some leasing companies, recognizing the frustration of their customers, offer a free pre-inspection a month before the lease ends. This helps lessees understand what to expect and prepare accordingly.

The Role of Independent Inspectors

I worked as an independent contractor for BMW North America, conducting these pre-inspections. My role was to educate consumers on potential charges and provide guidance on necessary repairs. Many lessees were unprepared, having not read their lease contracts thoroughly.

The Importance of Pre-Inspection

During the pre-inspection, I would identify chargeable damages and offer repair advice. The leasing company covered the cost of this service. It's crucial to remember that leasing companies plan to resell the vehicle as a low-mileage, pristine unit, maximizing their profits.

The Double Profit System

Leasing companies profit twice from each vehicle: first from the lease itself and then from the resale. This dual-income model is why they are in the business. If your vehicle suffers damage during the lease, you will be responsible for restoring it to its original condition.

BMW's Inspection Procedure

BMW's inspection process was thorough. I took digital photos of any damage, recorded the odometer reading and VIN plate, and conducted a complete mechanical inspection. BMW required tires to have at least 4/32 of tread at the time of return, which could be costly for some vehicles.

The Emotional Aspect

Many people find the inspection process unsettling, as it highlights the costs associated with leasing and returning a vehicle. It's natural to become attached to your car, and having its deficiencies pointed out can be disheartening.

Tips for a Smooth Lease Return

1. Obtain a Written Guideline: Request a written guideline from your leasing company detailing the end-of-lease requirements.
2. Repair the Vehicle Yourself: Address any necessary repairs yourself to avoid paying top retail prices.
3. Utilize Pre-Inspection Services: Take advantage of any free pre-inspection services offered by your leasing company.

Conclusion

Understanding the lease return process and preparing accordingly can save you hundreds of dollars and a lot of stress. By taking proactive steps, you can ensure a smoother transition at the end of your lease.

Interesting Stats

• Lease Penetration Rate: In 2020, the lease penetration rate in the U.S. was approximately 30%, meaning nearly one-third of new car transactions were leases (source).
• Average Lease Term: The average lease term in the U.S. is around 36 months (source).
• End-of-Lease Charges: According to a 2019 survey, 25% of lessees faced unexpected charges at the end of their lease (source).

By understanding these nuances and preparing in advance, you can navigate the end-of-lease process with confidence and ease.