Roseman: Tips on saving when returning leased car
December 10, 2010
Ellen Roseman
If you lease a car, you can get dinged for hundreds of dollars in excess wear and tear costs when you give it back.
Neil Rau, who leased a Mini Cooper S in 2007, brought it back to his dealer three months before the end of the lease. He had driven 56,000 kilometres, well under his 78,000 limit on the contract.
Later, he was stunned to get a bill for $3,600 in excess wear and tear charges (before taxes).
All of the tires had to be replaced at $375 each. Hail damage to the hood and roof required $1,600 in repairs. Scratches on the door and quarter panel cost $500 to fix.
The hail damage was particularly annoying. If he’d known about it, he could have made a claim on his car insurance.
But his insurer was denied access to the car because it was in the possession of the leasing company, Mini Financial Services.
“I’ve leased many times before and never had this end-of-lease shocker,” says Rau.
“I’m not paying. I’m going to court. I’m a doctor. I don’t have a mortgage and I don’t need a credit rating.”
He could have cut the costs if he had planned ahead, says Margo Quinn, general manager of Mini Downtown in Toronto.
“We call customers six months before the lease ends and let them know that they can book their own inspection for a time that suits their needs.”
Rau could have had asked for an inspection and checked the report before returning the car – since he had picked up his new leased vehicle before the previous lease was due.
Tires are prone to wear and usually have to be replaced at the end of a lease, Quinn says. The average life of a tire is 40,000 to 60,000 kilometres.
Instead of having the leasing company replace his tires with brand-new ones, he could have shopped around for used tires that still had some tread life.
She recommends buying a protection plan from the dealer before you lease. Mini has a plan that costs $1,099 and covers $7,500 in excess wear and tear at lease end.
Leasing customers shouldn’t have to buy wear and tear insurance, Rau says. He suspects that Mini (owned by BMW) is using inflated repair costs to subsidize losses on a leased car’s residual value.
“No, we don’t do that,” Quinn says. “BMW/Mini charges only for damage that is above the regular wear and tear.”
Sandra Drake wrote to me about $1,200 in excess wear and tear charges by Toyota Financial.
“I asked five friends about their end-of-lease experiences and discovered that Toyota is the only company where inspections are performed without the client present,” she said.
“I was on the premises at the time, but was not asked to witness the results. Why?”
She thinks the information was withheld because she might have declined to lease a new Toyota – which she was doing at the time – if she had known about the wear and tear charges.
The $1,200 charge was dropped when I asked Toyota to review her case. Drake was told that the dealer had ignored the policy of inspecting a car when the client is there.
Inspectors are reluctant to provide customers with the results because they don’t want to be challenged, says Jim Matthews, general manager of Leasebusters.com.
“Therefore, they typically mail the document to the client after the fact and separate themselves from the wrath of the reaction.”
Here’s his advice for leasing customers:
Make sure you’re there when the inspection is done.
Get a copy of the inspection report before surrendering the vehicle.
Find out about any excess wear and tear charges.
Repair the damage on your own or challenge the charges while the vehicle is still in your custody.
If you know about the damage beforehand, you can handle the repairs on your own. This will be cheaper than letting the dealer do the work.
Ellen Roseman writes about personal finance and consumer issues. You can reach her at eroseman@thestar.ca.
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