CLOSE    X

Advertiser Disclosure

CarBuyingTips.com has affiliate referral relationships with multiple web sites. This means that for many of the links you see on this site, we are paid referral fees for leads generated from visitors that click on links or fill out forms on this site. In some cases we are paid a commission for a purchase made on a site that is linked to from CarBuyingTips.com. Please view our advertising policy page for more information.

Our Visitor's Savings: $13,361,550

Advertiser Disclosure

How to Avoid End of Auto Lease Penalties and Scams

By | Published February 1, 2012

Auto leasing is stacked against most consumers, who rush in uneducated, and don't consider all the fees and penalties they face, especially at lease end. I hear from our CarBuyingTips.com visitors all the time at the end of their lease, in a panic because they have $3,000 to $5,000 in mileage penalties, $2,000 excessive wear and tear and $1,000 in new tire fees. But how did this happen? Let's rewind back in time a bit to step inside what happens at the end of a car lease and how you can avoid penalties and scams associated with auto leasing.

You Can Owe Thousands at Lease End

One main problem with leasing is you have inexperienced car buyers who go into the lease with the same ignorance that they exit out with 3 years later. Couple that with a few scams pulled on you by the car dealer, and you have a recipe for disaster about to explode. The root cause of all this aggravation is that every single lease contract has verbiage in the fine print on the back side that calls out steep penalties for trying to terminate your lease early (break the lease), and for not performing maintenance, mismatched tires, and for excessive wear and excessive mileage. It's all right there in very easy to read black and white print, very clearly explaining it, but people never read it, and thus they are not prepared to avoid penalties. This means you can owe thousands at the end of the lease that you were not expecting to pay. So what are these restrictions and how do we avoid them?

Lease Restrictions That Lead to Penalties

We all know about the steep mileage penalties associated with vehicle leasing. The front of your paperwork always shows the excess mileage charge of $.15 to $.20 per mile if you exceed 10,000 miles on some cars, and 12,000 miles for others. Many people lose track of this while driving their car all over the place, racking up mileage. If you cannot drive under 1,000 miles per month, be prepared for huge mileage penalties at the end. Most people go 5,000 to 10,000 over the limit and are facing $1,000 to $2,000 in penalties.

I read a lot of leases sent to us from our site visitors, and all contracts list very similar restrictions near the end of the fine print on the back side of the contract. Typically you'll see items mentioned such as maintenance, repairs, operating expenses, damage and excessive wear.

All 4 Tires Must Match

One really bad one that sneaks up on many people is the issue of matching tires. At the end of your lease, the contract states that your vehicle must have 4 matching tires with more than 1/8" tread left. Do not buy any recapped tires and don't just replace one tire with a non-matching cheapie tire. If you do this, they will charge you more than retail price for 4 brand new tires just because you wanted to save a few bucks on one tire. That's another $1000 that you could have avoided. You are required to follow the manufacturer's maintenance plan and change fluids when they should be changed. If you don't they will bill you for that too. If your oil and transmission fluid is not brown and purple respectively, then change the fluids. Otherwise you'll be black and blue later. During inspections they take a plastic credit card type device and run it up and down the paint nit picking for scratches and dimples and dents. The battery must be good, the odometer must be working, in short, the car should be roughly in the same condition in which they leased it to you, with only minor acceptable wear and tear. Any stains on the seats or carpets? Clean it off. If you have Stanley Steamer coming to your house, have them do your vehicle mats as well.

Scams That Cost You Thousands at Lease End

Too many people let down their guard and just drop of their car at lease end thinking they are done. The car dealer lies to them and says "don't worry we don't need to do an inspection, you are good to go." Then a month later you get a letter from the leasing company billing you for $2,000 in excessive wear and damage to the car. Here's a typical email from one of our visitors, returning his leased Lexus IS:

"At the dealership I requested the car to be inspected before I leave... Lexus dealer told me they don't do inspections anymore and they went for the Lexus Financial Company to send people for that. I expressed my concerns that I should be present. Again I was gently dismissed as "don't worry about it." I found myself obliged to leave the car (end of lease date) to avoid fees and on my way outside I took few shots of my parked car and the odometer (poor quality cam). Now I receive a letter from Lexus stating that I have damages worth $1,000 to pay."

How to Avoid Lease Penalties

Don't wait until the last day of your lease to determine if there is a potential to be charged fees. Now that we stepped into the vortex and we know what causes all these penalties and unexpected costs, let's look at how we can avoid them. First of all, a lease is a contract signed by both you the customer and the leasing company. You as the customer have the right to have the vehicle inspected when you bring it back at the end.

A few weeks before the end of the lease, call the leasing company and demand an inspection appointment, and make sure you show up. When you bring the car in, do not bring it back at night or in the rain. Return the car on a clear day so you can see all defects. Avoid lunch time as your point person is likely to be out at lunch, unless they specifically give you that time slot. So ensure the person you have the appointment with is in. Confirm he appointment the day before, and again the day of the appointment to ensure they will be there to inspect.

If the leasing company tells you to take it to a dealer for inspection, call the dealer and verify they will indeed do the inspection, and insist on an appointment time and person. When you get there, take lots of high quality photos of your car at the dealership, to refute any bogus claims they come up with later. Get photos of the interior and the odometer. Take photos using every angle. Get shots of a penny in the tire tread to prove how much tread is left. Photograph all 4 tires to show they are the same make and model. Then video tape the car inside and out with a high definition camcorder. Get close-up photos and video of any damage areas in case they make it seem bigger than it is.

It stinks that you have to practically be a lawyer to return your leased car or truck, but they are sticklers about piling on damage penalties. Do all this at the dealership to prove the vehicle was in good shape when you returned it to them.

Obtain Documentation Clearing You of Any Penalties

Ideally, the dealer does not want to give you a paper exonerating you of any damage or excess wear, so you may have to extract it out of them. So obtain a document from them clearing you of any mileage and excessive wear penalties. If they refuse, then report them to the Better Business Bureau and your State Attorney General web site consumer complaint form for violating your customer rights and perpetuating a scam to keep you out of the loop. The bottom line for you is to walk away that day with something in writing exonerating you of any more responsibility to the car. It's your right, you are the paying customer, so demand what is yours, and don't leave without it. Now they can't send you a letter a month later demanding $2000 for damages. What if your mileage penalty is in the thousands? You might consider just buying the car from them at the Residual Value, maybe even try to haggle the purchase price even lower. If you buy the car, you no longer owe them anything. A simple bit of planning ahead of time will save you a world of grief at the end of your car lease.

Author Jeff Ostroff

About The Author: Jeff Ostroff is a consumer advocate, Founding Editor and CEO of CarBuyingTips.com overseeing a team of expert authors. For over 17 years, he's been the recognized authority on car buying, leasing, used cars and financing. He developed sophisticated spreadsheet tools to help consumers negotiate on a level playing field. He is a widely sought out guru, cited by the press for his expertise in savvy car buying and preventing consumer scams. Jeff has been quoted in CNN, Bloomberg, MSNBC, Wall street Journal, Consumer Reports, NY Times, Reader's Digest, and many live call in radio shows. He has covered the automotive space since 1997. Jeff also has extensive experience and expertise in selling used cars for clients on eBay and Craigslist. Connect with Jeff via Email, Twitter or on Google+.

CarBuyingTips.com has affiliate referral relationships with multiple web sites. This means that for many of the links you see on this site, we are paid referral fees for leads generated from visitors that click on links or fill out forms on this site. In some cases we are paid a commission for a purchase made on a site that is linked to from CarBuyingTips.com. Please view our advertising policy page for more information.