Car Lease Extensions – What You Need to Know

Here at Mercedes on Lease we’re not just a great place to find your next lease car but we’ll also support you with in life questions you may have. In this article we aim to give you all the info on extending your Mercedes lease.

What is a Car Lease Extension?

A lease extension is simply when you keep the vehicle past the original contract end date. This can be as a formal or informal agreement, and we’ll look at these both a little later on.

One thing to be aware of is that you’ll enter an extension even if you keep the vehicle for just an additional day, and so you might accidently have an extension depending on when you arrange collection of the vehicle for. The funder will invoice you for any days past the contract end date so if you don’t want to pay these charges we recommend making sure you’ve got the collection booked for then. It will be your responsibility to contact the funder for collection and if you do not they will usually assume you want to keep the vehicle and so will put you into an informal extension.

Reasons to Extend Your Car Lease Agreement

There are a few reasons that we’ve seen customers extend their lease for, including:

  • Liking the car and wanting to keep it for longer
  • No new vehicle arranged
  • A delay to the arrival of a new vehicle
  • Not wanting to be tied into a longer-term financial commitment
  • An upcoming expected change in circumstances that may require a different type of vehicle but not just yet

Any of these, or any other reason you might have for extending, is valid and most funders will allow you to extend the lease agreement.

What is an Informal Lease Extension?

An informal extension is one where you keep the vehicle for longer than the lease agreement but there is no additional contract in place. With this, the terms of your previous agreement will be applied on a pro-rata basis however it will no longer take into account any large initial rental payment you made to lower the monthly payments so you will likely see the monthly rentals increase.

You’ll also want to keep in mind that the payments will no longer be taken in advance but will instead be issued in arrears so the payment date will move.

With an informal extension, you are not committed to keeping the vehicle for any set period of time so can return the car when you want but you should be aware that this also means the lease funder can request the car is returned to them at any time as well once you are out of the contract period.

This kind of extension work best for drivers who only need to keep their existing lease agreement for a short period such as if they’re waiting for delivery of their next vehicle.

 What is a Formal Lease Extension?

A formal extension involves you signing additional contracts in order to keep the vehicle for a longer period of time. You will be able to formally extend a lease agreement by six or 12 months usually.

This additional contract will confirm the mileage allowance, excess mileage charge, monthly rentals and end date of the agreement.

Just like with an informal extension you might see a change in the monthly price, as the contract terms take into account the vehicle age, current mileage and the market prices, and just like an informal extension the initial rental may no longer be taken into account.

When to Extend Your Car Lease

When you’ll need to decide on extending your agreement will depend on the type of extension you are after. With an informal agreement you don’t need to notify the funder and so there’s nothing for you to do other than decide you want to keep the vehicle. We recommend making this decision at least two weeks before the contract end date as this will be around the time you’ll need to arrange collection if you don’t want to extend the agreement.

If you are interested in a formal extension then you’ll need to decide about six to eight weeks before the end of your current agreement, as the paperwork and acceptance can take a couple of weeks and most funders require this to be in place before the final payment of your original lease is taken.

What Type of Extension is Right for Me?

The right type of car lease extension, or if extending is even the right choice for you, will depend on your individual circumstances. We recommend thinking about: how long you’ll need the vehicle for, what the price will be (you may need to ask for quotes) for each type of extension and if you would be able to manage without the vehicle should you opt for an informal extension and the funder requests the car back with little notice. The answers to these should help confirm which type of extension is best for you.

How to Get a Car Lease Extension

You will need to contact your lease funder in order to arrange a lease extension.

If you are looking for an informal extension then you’ll just want to confirm you are able to do this and the price change if there is any.

If you’re after a formal extension they will usually require you to complete additional paperwork and may ask for further information.

If you arranged your existing lease through Mercedes on Lease then you can always give us a call and we’ll help you speak to the correct team.

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