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When your van lease ends, what happens depends on the agreement you signed. On contract hire you hand the van back and your payments stop. On hire purchase you pay the final balloon payment and the van is yours. On a finance lease you never own the van, even after the last payment.
The good news? Most end-of-lease costs can be avoided with a bit of planning ahead of time. Start about four months out and you’ll have time to choose your next van, sort any damage and hand over without surprises. Here’s how:
First, which agreement are you on?
People use the word “lease”, interchangeably, for all three of these. But each contract ends in a totally different ways. The name of your agreement is always on the first page of your paperwork.
Contract hire. You rent the van for a set term and a set number of miles. At the end it’s inspected, collected and your payments stop. You pay for any extra miles and any damage beyond fair wear and tear.
Finance lease. The finance company owns the van and you pay to use it. Most finance leases end with a balloon payment. The van is then sold and if it sells for more than the balloon payment, you keep the difference. If it sells for less, you cover the shortfall.
Hire purchase with a balloon. You’re buying the van in instalments. The balloon is a bigger final payment that keeps your monthly payments down. Once you’ve paid the final balloon payment, the van is yours.
With hire purchase, the van is yours after the last payment. With a finance lease, it isn’t.
Been told you’ll own the van at the end of a finance lease? You won’t. It’s one of the most common mix-ups we hear. Read more about hire purchase and finance lease here.
Your four options
Not every option works on every agreement.
|
Option |
Which agreements |
What happens |
|
Hand it back |
Contract hire |
The van is inspected and collected. You pay any damage or mileage charges. |
|
Pay the balloon and keep it |
Hire purchase |
You own the van outright at the end. |
|
Refinance the balloon payment |
Hire purchase |
You spread the balloon payment over a new agreement. You keep the van but pay more in total. |
|
Part exchange |
Hire purchase, Finance lease |
Your van is valued and what you owe is settled. Anything left over can go toward paying for your new van or be paid to you. |
How do you choose? Start with the van itself. Is it in good shape and still right for the job? Paying the balloon can make sense. About to need tyres, brakes and a new clutch? Part exchange is usually the better route.
Part exchange includes collection of your old van. Your new one is delivered to you for free anywhere in mainland UK. Time this right and you’re never without a van.
Handing it back: what counts as fair wear and tear
Every well-worked van picks up marks. The question is, which ones are you responsible for paying for at the end.
What happens on the day
An assessor from the finance company inspects the van and records its condition and mileage. You sign a returns form and get a copy. Keep this safe. It’s your record if a charge arrives later.
Most funders judge condition against the fair wear and tear guide, as well as their company’s own guidelines. The BVRLA (British Vehicle Rental and Leasing Association) is the UK trade body for vehicle leasing. Its members follow a code of conduct and its guide sets a shared standard for what counts as normal vehicle use and what counts as damage. Read both the BVRLA and your finance company’s own guides at the start of your agreement and again a few months before the end. We are a member of the BVRLA (No. 7609).
Fair wear and tear or damage?
Usually fine:
- Light surface scratches up to 25mm, as long as no primer or bare metal shows.
- Minor surface marks in keeping with the van’s age and mileage.
Usually charged:
- Scratches over 25mm. Even smaller ones if primer or bare metal shows.
- Dents, chips and accident damage.
- Damaged wheels and trims.
- Worn or damaged tyres, including the spare.
- Stains, rips, tears and burns on the seats.
- Holes from racking or ply lining fixings, a damaged load floor or a damaged bulkhead.
- Paint damage or marks left when signwriting and vinyls come off.
- Chips and cracks in the windscreen, especially in the driver’s line of sight.
- Controls, lights or equipment that don’t work.
- Missing keys or documents.
- Miles over your allowance, at the pence per mile rate in your contract hire agreement.
How damage charges work
There’s no single price list for missing keys, scratches, worn tyres, etc. These charges depend on your van, your agreement and your funder. You can ask your funder how they price damage when you start planning handback.
On contract hire, extra miles are simpler to work out. Your agreement shows the rate in pence per mile. Multiply it by the miles you’re over and you’ll know the cost.
How to avoid damage charges
Inspect your van yourself six to eight weeks before. Wash the van and get a close look at it in good daylight. Be honest and ask someone else for a second opinion.
Work round the whole van. Check every panel, wheel and trim. Check every tyre, including the spare.
Test everything. Controls, lights and equipment. A warning light on the dash will get noticed.
Photograph it all. Every panel, the wheels, the cab and the load area. Keep the dates.
Remove signage properly. Use a professional so the paint underneath isn’t damaged.
Keep up the servicing. Service the van to the manufacturer’s schedule and keep the record up to date.
Be there on the day. If you can’t be, ask your funder for dated photos of anything marked as damage.
What to have ready on the day
- Every set of keys
- The service book or a digital service record
- A copy of the MOT record
- The owner’s manual
- The locking wheel nut key
When to start your countdown
Here’s what to do and when.
120 days before. Find your contract’s end date and check your mileage against your allowance. If you want a factory-order van, talk to us as early as you can. Lead times often run to 12 to 16 weeks, sometimes as long as 6 months.
90 days before. Choose your option. Get a part exchange valuation and your settlement figure. Pick your next van.
45 days before. Get a firm price on your next van, with a delivery date. Book the handback or collection. Get any repairs done.
30 days before. Get your finance approved and your delivery date confirmed. Gather the keys and paperwork.
The result? Your new van arrives as the old one leaves. No gap and no weeks of paying for two vehicles.
Running several vans?
If you’ve bought two or more vans at the same time, their agreements likely end together. That’s just one decision covering several vans.
In this case, we recommend starting your countdown process earlier, about five months before the first end date. Get every van’s agreement and end date together, then decide whether to replace them all at once or in stages.
All at once:
One order, one specification and one delivery schedule. The admin is done in one go and your vans are sorted. The catch is that they’ll all end together again next time.
In stages:
You replace a few vans at a time. This spreads the cost and keeps vans working while the new ones arrive. It also staggers your next renewals, so they don’t all land at once. If you plan to keep some of your current vans a little longer, you may extend or refinance their agreements.
Running three or more vans? See how we work with growing businesses.
Frequently asked questions
Can I end my van lease early?
Usually yes. There will normally be a cost. On contract hire you pay an early termination charge set out in your agreement. On hire purchase or a finance lease you can ask for a settlement figure and pay off what you owe. You may also be able to part exchange the van before the agreement ends.
Who pays for damage at the end of a van lease?
You do but only for damage beyond fair wear and tear, not the everyday marks on a working van. On contract hire the van is checked against the standard in your agreement, usually the BVRLA guide. On hire purchase and finance lease agreements, damage lowers what the van is worth when it’s sold or part exchanged.
What is a balloon payment?
A balloon payment is a final payment at the end of a finance agreement. It keeps your monthly payments lower because part of the cost is moved to the end. On hire purchase, pay it and the van is yours. Rather not pay it in one go? You can refinance it or part exchange the van to settle it.
Talk it through with a van expert
Call us 0117 428 7721 and tell us which agreement you’re on and when it ends. You’ll speak to one of our van advisors who’ll help you work out what to do next.
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