Charges can pile up when you end your car lease

December 12 2010 by Ellen Roseman

I don’t believe in leasing. Instead, I like to buy cars that last for years and drive them into the ground. My 1998 Toyota Sienna minivan is still going strong.

Still, I know that leasing has its attractions. You can trade in your car before the manufacturer’s warranty runs out and get something newer and nicer. And you don’t have to pay the sales tax up front, since you pay it as you go each month.

But danger may lie in wait when you surrender a leased car to the dealer. You could get a $3,600 bill for excess wear and tear, as Neil Rau did with his leased Mini Cooper. It was a real shocker, he told me.

It’s not unusual to get dinged for damage if you don’t return a leased car in mint condition. So, you should identify the repairs that need to be done and do them yourself.

The leasing company will make you pay prices far in excess of what you would pay on your own. For example, Dr. Rau ended up with a $1,500 bill for four tires.

The Mini dealer said they were special tires that could go for 100 kilometres or more when they were flat. Even so, that’s a mighty expensive set of wheels.

Why did he have to pay for new tires at all? After 56,000 kilometres of driving, “you would expect the tires would normally be at the end of their life. This seems to be a misinterpretation of ‘excess’ wear and tear,” a reader said.

Maybe it’s better to keep the car when the lease ends. If so, does anyone have any tips on negotiating a buyout?

I’m posting a few stories about bad experiences with end-of-lease charges.

16 comments

  1. VS

    Dec 12 2010

    I made the mistake of Leasing a Mini Cooper from Downtown Mini and was also fleeced when I turned it back in.

    They found a small (less than one inch) scratch on the windshield caused by the windshield wiper blade and insisted that I pay $1,900 for a new windshield.

    I had never seen it in the 3 years I owned the car and you really had to search for it to find it.

    They would waive it if I leased another Mini. If not ~ PAY UP.

    I can assure you that no one buying the car after I turned it back in would ever have located the scratch and I know they never replaced the windshield. But I had no choice ~ I had to pay.

    Even the service manager at the BMW service department where the car was leased agreed that it was an absurd charge. He tried to dispute it on my behalf and was told to back away.

    They find a way to hit you for more money at the end of the lease and you can’t win. They also hit me for minuscule wear on two tires.

    This dealer seems to use this as a negotiating tool with their end of lease customers.

  2. BO

    Dec 12 2010

    I have leased quite a few vehicles and the last GM vehicle I leased was a 2002 Chev Trailblazer.

    At the end of the lease (Dec. 2005), I returned it to the dealer and a rep went over the vehicle while I was there.

    I was well under on the mileage and overall the vehicle was in very good condition.

    They gave me a piece of paper showing what they had checked it and showed there was no “Abnormal Wear” on the vehicle. Also I was not very pleased with this vehicle, as the quality was poor due to GM’s cost cutting at the time.

    About 60 days later, I get a bill from GM telling me that I owe them approx. $600 for a new windshield, as there were more than the allowable number of chips on the windshield.

    I did not notice any chips when I owned it or I would have had them repaired.

    The letter stated I could go on their website and see pictures of the damage. When I did, they also had a photo of the odometer reading on the truck.

    Ironically, there was 70 km’s more showing than when I returned the vehicle and what was documented on the paper they had given me when I returned it. In the photos of the windshield, you couldn’t see any marks or chips.

    I called them and asked them about the claim. They stated they were small marks that are common on windshields and not actual chips.

    I told them that that would be normal wear and tear and also the vehicle was driven 70kms from when I turned in the vehicle and perhaps the damage was done then. They had nothing to say to that.

    I also told them that I had not leased my next vehicle as yet, but it would most certainly not be a GM after this sneaky ordeal. I said I wouldn’t pay it and would see them in court.

    They told me that they would write it off and I was not required to pay it.

    Since then, I have leased two other vehicles but neither was a GM and I won’t be getting another GM vehicle in the future.

    PS: I often wonder why if you return a vehicle with under the allowable km’s, you don’t get a credit. They are sure fast to charge you if you go over the allowable kms!

  3. TVK

    Dec 12 2010

    Your column about lease return problems contained excellent guidance which everyone should follow, but even if you do everything right, it may not protect you.

    Here’s why: the “grounding dealer” (where you turn in your leased vehicle) can assess the returned vehicle as being pristine in all respects, but your legal contract is actually with the finance company, and they will always have the last word.

    In August of 2008, I returned an end-of-lease Dodge Magnum to the dealer from whom I was leasing a new Dodge Journey. My wife and I spent a full day cleaning the vehicle the day before the return: wash, wax, steam-cleaning the interior carpets and polishing/detailing everything inside and out including air vent vanes, etc. It was beautiful!

    As a small joke, when we arrived and parked the vehicle at the dealership, I even stuck the detailed vehicle information sheet (the one all new vehicles have on a side window listing all options/price, etc.) on the inside of the driver’s window – yes, I had actually kept it from when the car was new.

    In addition to their technician’s inspection in the shop, the dealership’s Sales Manager inspected the vehicle and the General Manager signed the “Vehicle Return Receipt”, which includes a “VRR Condition Report” page to note any damage, excess wear or missing items.

    Everything was perfect and they joked about how it looked exactly like all the new cars sitting on their lot.

    Imagine my surprise when two weeks later I received an “Invoice and Lease Settlement” in the mail from Chrysler Financial, claiming I owed them $637.33 for “excess wear and tear”, with no details as to the reason.

    I called the dealership and they said I had to deal directly with Chrysler Financial.

    When I called Chrysler Financial, they said the floor mats were missing (not true; but they charged me $70), both key fobs were inoperable and had to be replaced at a cost of $440 (I think the battery may have been low in one of them but at least one of them worked when I returned the car because they used it to unlock and lock the car!).

    They also charged me $54 to remove the after-market trailer hitch (I had ordered the “Trailer Towing Option” but couldn’t order the trailer hitch itself because they weren’t going to be available from Dodge for another 6 months, so I had a reputable after-market hitch installed since we needed to tow a trailer soon after taking delivery).

    After lengthy negotiations, they agreed to a reduced settlement of $350, which I paid.

    I asked them to return “my” $300 trailer hitch but they said it had already been disposed of (maybe I should have reported it to police as property theft?).

    Now here’s the ugly part: on the “Vehicle Return Receipt” (VRR) filled out and signed by the grounding dealer, the Sales Manager entered “Yes” to the question “Will customer be purchasing a new vehicle?” and he entered the VIN # of the new vehicle being purchased in the space provided on the form.

    Below this question is prominently printed “If lessee is purchasing a new vehicle, the grounding dealer is responsible for payment of all outstanding obligations on the account terminated by the return of this vehicle.”

    In other words, Chrysler Financial should have been chasing the dealership, not me, to pay these fees!

    Neither the dealer nor Chrysler Financial agreed with me, and after Chrysler Financial threatened to send the invoice to a collection agency, I eventually paid them.

    My legal lease contract is with Chrysler Financial and I was not about to enter an expensive legal battle with a billion-dollar corporation over $350 and harm my credit rating as a result.

    So, by all means, people should do as you say and get the grounding dealer to appraise and inspect the returning vehicle well before the lease is up and fix anything they note.

    But understand that you may still get a nasty surprise after the dealer ships the vehicle back to the manufacturer’s finance company, whose inspectors have the final word.

  4. LH

    Dec 12 2010

    The problem with cars that are leased is that a lot of people don’t take care of them as well as they should. They think they’re only renting the car and any damages would be covered by the dealership as the cost of leasing the vehicle.

    My father was dinged by Chrysler for returning a minivan a few years that had a few minor scratches. He assumed he could just return the van and that’s the end of it.

    They charged him $800 to touch up a few minor scratches that would have cost $300 at an independent shop. He went berserk when he got the invoice, but I explained to him it’s his fault because he should have clarified with
    the dealership exactly how the van was supposed to be returned.

    The problem with dealerships is that they add a brutal markup on their services. They also tend to find all kinds of small things which they flag as a safety issue. When you use OEM parts and labour hours, the cost really adds up.

    I think most people would be well advised to do their own inspection about 3 months prior to returning the car and have damages fixed much cheaper at independent shops. Most cars would pass the inspection, even if the client doesn’t use OEM parts.

    But there may be exceptions to that rule for higher-end brands, so that the resale value is preserved as much as possible. I mean, you can probably get away putting cheap Chinese tires on a Toyota Camry but probably not a Mini or BMW.

  5. Tarry Shebesta

    Dec 13 2010

    As LH says, it’s always best to have a third-party inspection and try and fix any issues prior to turning it in.

    Leasing through an independent leasing company vs a dealer can benefit you, as the leasing company can handle any issues that may come up.

    Wear & Tear insurance can also be beneficial in protecting you from unforeseen issues at lease turn in.

  6. Mark

    Dec 13 2010

    Excellent article. Thanks for posting.

    I have leased 3 cars. For two of them, I found a 3rd party buyer prior to the end of the lease. For a relatively small admin fee ($300-500), they purchased the car directly from the dealership and saved themselves the tax if I were to buy the car and resell to them.

    I am on my 3rd leased vehicle, but I am not going to do it again. Too much stress as to what my wear and tear charges might be.

  7. R7

    Jan 5 2011

    Isn’t it basically extortion when they are saying you have to pay or we will ruin your credit rating? I had the same thing happen with Chrysler Financial and if you scour the Internet you will see that they do this on purpose. Most people pay so that their credit rating doesn’t suffer. They other scam they pull is they keep your security deposit no matter what condition the car is in claiming excess wear and tear. What I ended up doing was not paying my last month because I paid first and last month on the lease. They said I had to pay the last month and then they would reimburse my deposit. I told them “whatever” knowing I’d never see that money.

    Of course when I returned the car to the dealer (40000km 2 year lease) 10 k under my allotted kms allowance, they still tried to tell me I needed to go buy new tires. I told the dealer he was living in a dream world. He then threw a tantrum and said I’d be getting a bill from CF so it didn’t matter to him.

    Now my situation was a little different in that I lost my job and my credit was already shot so I just told them to bring it on. And they did :-). $500+ bill for missing last payment and wear and tear. Nothing about the tires though. Funny how they didn’t subtract my security deposit from this.

    Bottom line: Chrysler lost a customer for life and I’ll never lease again. Too bad they are allowed to get away with things like this. My credit has taken a hit but over time I can rebuild it.

  8. Sogaud Damcheep

    Sep 28 2011

    Accept responsibility for your leases, people! Buyers are liars.

    I have a friend who works at a dealership and he has to deal with people trying to scam the leasing divisions.

    Putting smaller tires on the vehicle upon return to save money, leaving the winter tires on the vehicle outside of the acceptable time frame….engine light is on, A/C doesn’t work….the list goes on. I hear it all.

    You leased it, so you are at the mercy of the leasing company. The inspections are completed by a 3rd party company.

    My advice: don’t lease again and if you do, take pictures of your vehicle upon returning it to the dealership.

  9. Sarah

    Oct 7 2011

    I have a leasing question. I leased a car and I’m at my end of lease. I had the inspector come to my house and watched him do the inspection.

    Long story short, he was VERY lazy and missed something that I know is a major repair. (it’s a convertible and the top won’t go down! He was so lazy he didn’t even TRY IT!)

    The leasing company told my husband not to mention it and only to repair this item if the inspector catches it.

    Am I only responsible for the items he listed on his report? Or am I at risk of being billed for this after the fact, even though I was not told to fix it?

    This is my first lease and I don’t know what to do. I don’t want to pay the $1,500 to fix it if I don’t have to.

  10. Rob

    Oct 17 2011

    I returned a leased truck from Chrylser and got a bill for $150.00 a few months later for a part they said was missing. After I challenged them, they came back and said that after looking into it, my year of truck didn’t come with that accessory and dropped the charge. Scammers.

  11. Lindsay

    Feb 13 2013

    I have a leased mini cooper and had to replace my tires during the lease. It clearly states in the lease agreement the brands of tires that are accepted upon lease return.

    Mini coopers are small and save space by not including a spare tire. Instead, they use run flat tires as a safety precaution so you aren’t left on the side of the highway if you get a flat.

    I don’t think this is an example of the leasing company overcharging you, but it’s a case of the lessee not reading the lease carefully.

  12. Frances

    Jun 13 2013

    I just am ready to turn in my Mercedes Benz and I agree the inspections are a money gouger!

    However, mine passed, just superficial scratch on tire, but I am challenging that. If I replace it it has to be the same type of tire, not brand.

    There is an option of “leave the key and walk away” and there is a fee for that, but I will consider this when I lease my Volkswagen!

    Before the inspection, I googled what to look for and did my own. My advice is that all lessors do the same thing to avoid a headache!

    The second inspection is when I leave my car at the dealer, they just check to ensure I took care of the recommended repair.

    BMW is the worse for these inspection, worse than Mercedes Benz.

    Long story short, pay the fee to “walk away” end of lease!