End of Lease Explained: Fair Wear and Tear, Excess Mileage and Ending a Car Lease Early
Quick answer
When a business car lease ends, the car is collected and inspected by an independent company, checked against the industry Fair Wear and Tear Standard published by the BVRLA, and its mileage compared with your contract allowance. Normal wear from everyday use costs you nothing. Damage beyond the standard, missing items such as keys or service history, and miles over your allowance are charged.
Most end of lease charges are avoidable. Checking the car 10 to 12 weeks before it is due back, getting your mileage allowance right at the start, and knowing your options if you need to end the lease early will protect you from almost every unpleasant surprise.
The end of lease timeline
The end of a lease is a process that starts around three months before the car leaves your drive. This is how it normally runs on a Business Contract Hire agreement.
Three months before: decide what happens next. Will you replace the car, extend the agreement, or hand it back with nothing to follow? Ordering a replacement takes time, so start the conversation with us early.
10 to 12 weeks before: appraise the car. The BVRLA recommends checking the car at this point, so there is time to repair anything outside the standard. Ask your leasing company for a copy of the Fair Wear and Tear Guide.
Before collection: repair and prepare. You can have damage repaired yourself before return, provided the work is done to a professional standard by a reputable repairer who gives a fully transferable warranty. Clean and valet the car, and gather both keys, the service history and any accessories it came with.
On the day: be there for collection. The BVRLA recommends you are present. You and the collection agent should agree the visible condition and both sign the collection sheet.
Afterwards: the inspection report. Some funders inspect fully at collection; others complete the inspection later at their own site. Any charges should be itemised against the standard.
The BVRLA's free Return Ready tool lets you photograph damage on your phone and see what the standard says about it. It is well worth using at step two.
Fair wear and tear: what is allowed and what gets charged
The BVRLA defines fair wear and tear as deterioration caused by normal use. It is not the same as damage, which comes from a specific event such as an impact, careless loading or harsh treatment. You are never charged for refurbishment that results from normal wear.
The Fair Wear and Tear Standard sets out exactly where the line sits. The figures below are the ones most commonly applied; always check the edition in your own contract, as limits are reviewed from time to time.
Area Normally acceptable Normally chargeable
Scratches Up to 25mm, primer or bare metal not showing Longer scratches, or any through to primer or metal
Dents Small dents with unbroken paint, no more than two per panel Dents on roof or swage line, dents with chipped paint, more than two per panel
Alloy wheels Scuffs up to 50mm around the rim Dents, cracks, corrosion, damage to spokes or hub
Tyres Legal tread, correct make, size and speed rating Sidewall damage, uneven wear, wrong specification
Glass and lights Minor chips that don't affect vision or roadworthiness Cracks, or chips in the driver's line of sight
Interior Normal wear consistent with age and mileage Burns, tears, stains, odours, holes in carpets
Items Both keys, full service history, all accessories present Missing keys, gaps in servicing, missing parcel shelf or cables
Repairs before return are allowed. Professionally repaired chips, scratches and dents are acceptable, provided the repairer can give a fully transferable warranty. For kerbed alloys and small dents, a local smart repair is often cheaper than the end of lease charge.
Electric cars have one extra item to check: make sure the charging cables supplied with the car go back with it. They are expensive to replace and a common missing item.
Excess mileage charges and how to avoid them
Every contract hire agreement has an annual mileage allowance, multiplied across the term. Go over it and you pay a fixed rate for every extra mile. The rate is written into your agreement before you sign, and it varies by vehicle; a premium car usually carries a higher rate than a small hatchback.
The arithmetic adds up quickly. On a four year agreement, running 3,000 miles a year over your allowance means 12,000 excess miles at the end. Even at a modest rate per mile, that becomes a significant bill.
How to avoid it:
Be honest about mileage at the start. A slightly higher allowance adds a little to each rental; a large excess mileage bill arrives all at once.
Check progress every six months. If you are heading over, ask whether your funder will adjust the allowance mid contract. Many will, and it is almost always cheaper than paying excess charges at the end.
Know that unused miles are rarely refunded. Most agreements don't credit you for driving less, so overestimating by a huge margin also wastes money.
Getting the mileage right is one of the main reasons to use a broker rather than taking an online deal at face value. We set out how that conversation works in How Business Vehicle Leasing Works With a Vehicle Broker.
Ending a car lease early
This is the question we are asked most when a business changes direction, a driver leaves, or circumstances change. The honest answer is that ending a contract hire agreement early is possible but rarely cheap, and you have far fewer legal rights than many people assume.
There is usually no legal right to end a car lease early. The Consumer Credit Act gives some hirers a right to terminate, but section 101 excludes agreements where payments exceed £1,500 a year, and agreements for business purposes where the vehicle was acquired at the hirer's request. In practice, that covers almost every business car lease. Early exit is governed by the terms of your contract.
What it typically costs. Most funders charge an early termination fee, commonly calculated as a proportion of the rentals still to run. Your agreement sets out exactly how it is worked out, so ask for a settlement figure in writing before you decide anything.
Alternatives worth exploring first:
Transfer the lease. Some funders allow another business or a director to take over the agreement, subject to credit checks.
Redeploy the car. If a driver leaves, moving the car to another employee costs nothing.
Ask about a settlement and replacement. If you are upgrading, some funders will reduce the termination cost when you take a new agreement with them.
Choose flexibility from the start. If you know your plans are uncertain, a shorter term or a flexible product may cost slightly more each month but far less than an early exit. Our flexibility page explains the options.
Hire purchase and PCP work differently from contract hire, and some regulated agreements do give a statutory right to hand the car back once you have paid enough. If that applies to you, see our PCP finance page or talk to us about your agreement.
If you disagree with an end of lease charge
Charges should be itemised against the standard, and you are entitled to challenge any you think are wrong. Work through these steps in order.
Check the evidence. Compare the inspection report and photos with your own collection sheet and the photos you took on the day. This is why being present at collection matters.
Raise it with the funder in writing. Quote the part of the Fair Wear and Tear Standard you believe applies.
Ask for an independent engineer. Under BVRLA guidance you can pay for an independent qualified engineer, agreed by both parties, to examine the evidence. The engineer's decision binds both sides, and if it goes your way the BVRLA member refunds the reasonable cost of the examination.
Use the BVRLA's dispute service. If you have exhausted the funder's complaints procedure, the BVRLA's alternative dispute resolution service is approved by the Chartered Trading Standards Institute and reviews whether the member has breached its Code of Conduct. Eligibility depends on the type of customer and agreement, so check before you apply.
This is one of the practical benefits of dealing with BVRLA members at every stage. VCEA is a BVRLA member, and if a charge on a lease we arranged doesn't look right, we will help you challenge it.
Your end of lease checklist
Three months out: decide whether to replace, extend or return
Check current mileage against your allowance
Ask your funder for the Fair Wear and Tear Guide that applies to your agreement
10 to 12 weeks out: appraise the car in good daylight after a wash
Book professional repairs for anything outside the standard, and keep the warranty paperwork
Gather both keys, the service history, the locking wheel nut and any charging cables
Valet the interior and remove personal items and any business equipment
Take dated photos of every panel, wheel and the interior before collection
Be present at collection and sign the condition sheet
Check the final inspection report against your photos
Frequently asked questions
What happens at the end of a car lease? The car is collected, inspected against the BVRLA Fair Wear and Tear Standard, and its mileage checked against your allowance. You pay only for damage beyond the standard, missing items and excess miles.
What counts as fair wear and tear on a lease car? Deterioration from normal use, such as small scratches up to 25mm that haven't broken through to primer, light scuffs on alloys and normal interior wear for the car's age and mileage. Damage from a specific event, such as a dent from an impact, is not fair wear and tear.
How much are excess mileage charges? The rate per mile is fixed in your agreement before you sign and varies by vehicle. Check it in your contract, and if you are running over, ask your funder about adjusting the allowance before the end of the term.
Can I end my car lease early? Usually yes, but at a cost. Most business car leases have no statutory right of early termination, so the early exit charge set out in your contract applies. Ask for a written settlement figure and consider transferring or redeploying the car first.
Can I repair damage before handing my lease car back? Yes. Repairs are acceptable if they are carried out to a professional standard by a repairer who provides a fully transferable warranty.
What if I disagree with the damage charges? Challenge them in writing with your evidence. You can request an independent engineer's assessment, and you may be able to use the BVRLA's dispute resolution service if the funder is a BVRLA member.
Plan your next lease before this one ends
The best time to think about the end of a lease is at the start of the next one: the right term, the right mileage and the right level of flexibility avoid most end of lease costs before they arise. Read more about Business Contract Hire, see our FAQ, or call 01733 836563 to talk to us about replacing your current car.
Written by Chris Simpson, Director of Business Development at VCEA, with over 25 years in the UK automotive industry.
Sources
BVRLA: making a complaint and alternative dispute resolution
Consumer Credit Act 1974, section 101: right to terminate hire agreement
Important information
This article is general guidance, correct as at October 2026. The terms of your own agreement always take priority, so check your contract or ask us before acting.
Vehicle Consulting East Anglia is a trading name of C&N Consulting Services Ltd, FRN 1029606. VCEA is a credit broker, not a lender. Finance is subject to status. VCEA is a member of the BVRLA.
