Can you extend a car lease?
Can you extend a car lease?
Understanding car lease extensions
If you’re coming to the end of your car lease agreement, you might be wondering what happens next. If you’re feeling happy with the car, and don’t want the hassle of changing it, one option may be to extend your lease contract. This might also apply to you if you’re waiting for a new car and there’s been a delay, so you just want your current car to tide you over until the new one arrives.
Either way, extending your car lease is sometimes an option, but not always. Your first port of call should be your lease agreement, which should set out in detail what happens at the end of your lease and whether or not it’s possible to extend it. Some types of car lease end with you owning the car, in which case an extension of the ‘lease’ part of the agreement may not be possible. It’s more likely to be a possibility if you’re on a personal contract hire (PCH) agreement.
If it is possible, you may have the option of either a formal or informal extension, and you may need to pay an admin fee. With an informal extension, you just keep leasing the car until the company requests to collect it, though you do need approval to do this. There’s less paperwork involved with an informal extension, and it’s a good option if you have a bit of a gap between one contract ending and the next beginning. With an informal extension, it’s unlikely you’ll be able to keep the car longer than six months after your formal contract ends.
If you want to extend it for longer than this, you’ll need a formal extension. These are usually for six to 12 months, in writing, and include new mileage limits, new monthly rates and the revised end date. You’ll probably have to request the extension at least 90 days before your lease contract is due to end, so it’s important to check your terms.
One point to note is that a lease extension isn’t the same thing as a lease renewal; an extension is a continuation of your current contract, while a renewal is where your current lease agreement is replaced with a new one.
The pros and cons of extending your car lease
The main benefit to extending your car lease is that you get to keep the car you’ve come to know and love for a bit longer. If you’re undecided about which car you want to get next, it also buys you a bit more time to see what’s available. If you’re experiencing the increasingly common delays in lead times for a new car, it’ll also keep you on the road until you pick up the keys to your next vehicle.
One of the downsides to extending your car lease is that you’ll often need to agree to revised monthly payments – which may well be an increase. Not only that, but you’ll likely have to pay admin fees, which could be in excess of £100. If you then need to get out of the extension early, perhaps because your new car becomes available, you’ll also need to pay early exit fees.
On an informal extension, you run the risk of the company recalling the car with no notice, leaving you with an empty driveway. Also, if you’ve not agreed to an increase on your mileage limit - which you won’t have done in an informal extension - you may end up paying a penalty should you exceed the agreed mileage.
Finally, if you’ve leased a brand new car for three years, you won’t have had to think about MOTs for the duration of your contract to date. Extend your contract and you’ll need to start booking your car in for this, as cars need an annual MOT once they reach three years of age.
Alternatives to extending your car lease
If you’re not able to extend your lease, or you’re just looking to get an idea of the other options open to you, the good news is that there are plenty of other routes you can go down. One is leasing a new car, because the way car leases are designed to work is that you keep getting a brand new car on a new lease at the end of your current lease agreement.
If you’ve become attached to this specific car and want to keep it, another option is to ask the company you’re leasing from whether you can buy it. While this is normally only an option in Hire Purchase (HP) and Personal Contract Purchase (PCP) lease agreements, it’s still worth asking the question.
If you’re simply needing to bridge the gap between one contract ending and another beginning, or you’re waiting for the delivery of a new car, another option is to rent a car for the period in between. Even better, you could opt for a car subscription, which is a much more flexible alternative.
Introducing car subscription as a flexible alternative
A car subscription is a bit like a lease, but a lot more flexible and with a lot more included. You’re only ever committed for a month at a time, which means you can hand the car back whenever you like – so it’s a great option for plugging a gap between cars. It’s also handy if you’ve not yet decided which car you want next, as you can try a number of different cars before you buy, trialling them for a month or two at a time to see what suits you.
As well as this high degree of flexibility, the other thing that makes car subscriptions a better alternative to extending your lease is that all the running costs are rolled into a single monthly payment. It means you won’t need to think about insurance, tax, maintenance, breakdown cover or any of the other expenses or admin associated with car ownership or leasing.
In short, a car subscription gives you a level of freedom and flexibility that leasing won’t.
Final thoughts
If you’re thinking about extending your car lease, it’s worth looking into all the available options before making a decision. While a lease extension can be a good option in certain circumstances, it could well be that a car subscription provides a flexible and hassle-free alternative that you can use either to plug a gap or as a longer-term means of enjoying the benefits of car ownership with none of the stress.
If you’d like to find out more about the flexibility and convenience offered by car subscriptions, whether as an alternative to extending your current lease or as a liberating life choice, why not browse our cars and see what might be right for you? You could be picking up the keys in as little as seven days, and because you’ll only need a month’s subscription fee - which you get back on return of the car - you won’t need to worry about large upfront costs.
