The short answer
At the end of contract hire you normally return the car and settle any excess mileage or damage charges. At the end of hire purchase the business pays any final balloon and option fee to own it, or refinances or sells. Planning three to six months ahead gives you more options.
Contract hire endings
The car is collected and inspected against fair wear and tear standards. Excess mileage is charged at the agreed rate. Some funders offer extensions.
Hire purchase endings
Settle the balloon to take ownership, refinance it over a further term where available, or sell the car and use the proceeds, covering any shortfall.
Changing car early
Many directors ask whether they can change before the end. It is usually possible, but you need a settlement or termination figure first. If the car is worth less than the settlement, there is negative equity to resolve.
Limitations and eligibility
- Early termination costs vary by agreement.
- Negative equity may need to be paid or rolled in, increasing borrowing.
- Refinancing a balloon is subject to fresh approval.
Map out your options in five steps
Educational comparison, no obligation to enquire.
Frequently asked questions
What happens at the end of a business car lease?+
The car is usually returned and inspected; excess mileage and damage beyond fair wear and tear may be charged.
Can a director change their car before the finance agreement ends?+
Usually yes, after obtaining a settlement figure. Any shortfall must be addressed.
When should I start planning?+
Three to six months before the end date gives time to compare options.
Related reading
Sources
This guide is general information and not tax, legal or accounting advice. Sorbus Finance is a credit broker, not a lender. Finance is subject to status and lender criteria. Review your position with your accountant.