Close up of car steering wheel

What to do if your circumstances have changed

The COVID-19 pandemic has caused a massive shift in both our work and private routines and consequentially our car use.

Some of us may now be covering significantly more miles than we were when we took out our lease. Others may now do a lot less miles, or no longer need their vehicle at all.

In other cases, we may be looking to extend our leasing contract as the most cost-effective option to stay mobile. Or our financial circumstances may have deteriorated to the extent where we can no longer afford our monthly payments.

If any of these circumstances hold true for you, here are your options.

Higher mileage than expected

Higher mileage due to COVID-19

You may find that you are covering significantly more miles in your car instead of using public transport or to provide extra support to those within your community. Or you may have changed jobs and are now undertaking a longer commute than initially anticipated.

For this reason, you may be facing significant excess mileage charges at the end of your lease.

What are your options?

During COVID-19 and beyond, any changes to your lease contract are at your funder's discretion. Some providers do not offer a mileage extension as standard at all. Therefore, the first step is to check your lease contract. If you are eligible, contact your funder to make the request.

When it is possible to apply for an amendment to your mileage limit your monthly cost will adjust upwards to reflect the additional depreciation to the vehicle. Terms do apply depending on your funder; you may be required to be a certain proportion into your lease (usually a year) and with a designated time remaining (usually 3 – 6 months). Some funders also require that the mileage change is at least 10% greater than the original.

If you are facing an excess mileage charge that would be substantially greater than the cost of amending your lease contract, your funder may be obliged to consider your circumstances under the industry-wide ‘Treating Customers Fairly’ policy. Both the BVRLA and the Financial Ombudsman would take a harsh view on companies not honouring that responsibility. If you are being denied a mileage extension and you feel this applies, refer your case to those regulatory bodies for appropriate advice.

Lower mileage than expected

Lower mileage due to COVID-19

Mileage is inherently linked to the residual value of your car. Therefore, the less miles you travel the more your car could be worth and therefore your lease car should cost less.

If your circumstances have changed because of COVID-19 and you now cover significantly less miles, it is likely to be financially beneficial to reduce your contracted mileage.

What are your options?

As above, any contract changes are made at your funder’s discretion and are not guaranteed. 

However, if your overspend is due to be considerable and you are at a significant financial disadvantage as a result, the funder of your lease my face obligations to consider your changed circumstances and to amend your lease contract accordingly.

No longer need the car

I no longer need my lease vehicle

If your circumstances have changed to the extent that you no longer need your lease vehicle at all, are you able to hand it back early?

What are your options?

Unfortunately, the options for those looking to terminate their vehicle lease early are not often cost effective.

It is possible to terminate your lease early, but you should expect to pay up to 50% of the outstanding payments.

If you are leasing the vehicle on Business Contract Hire you may be able to transfer your lease to another limited company. They will then become responsible for making the lease payments and maintaining the car. For personal customers, regrettably lease transferal is not possible for most Personal Contract Hire agreements.

If you want to discuss terminating your lease early, contact your funder.

Affordability changes

I can no longer afford my lease payments

The financial repercussions of COVID-19 have been unpredictable and far reaching. Job losses or income changes may have affected our ability to cover monthly expenses, including those for lease vehicles. With stress and anxiety at an all time high, it‘s just one extra thing to worry about. So, what can you do if this affects you?

What are your options?

The Financial Conduct Authority has announced support for car finance customers suffering financially because of COVID-19. As a result, lease customers affected by the pandemic are entitled to request a payment holiday of up to 6 months.

Their proposal means:

  • those who have not yet had a payment deferral will be eligible for 2 payment deferrals of up to 6 months in total
  • those who currently have an initial payment deferral, will be eligible for a further payment deferral of up to 3 months

Borrowers have until 31 January 2021 to request this support from their funder.

It remains that those who are able to continue making their lease payments should continue to do so. Taking a payment holiday will not be listed as missed payments on your credit file. However, it is understood that it could affect an applicant's ability to gain credit in future. This is because funders always consider a range of information when making lending decisions.

Lease extension

Extending my lease term

If you are coming to the end of your lease over the next few months the most affordable way to stay mobile may be the continuation of your current lease.

Extending your lease will prevent you having to invest in a new car or digging out for a new deposit. Equally, the arrival of your new car may be delayed due to the pandemic and you need a little bit of extra time with your current car to tide you over.

Overall, extending your lease may buy you some much-needed extra time to assess your options.

What are your options?

There are generally two choices available to customers looking to extend the lease on their car or van: a formal or informal extension.

An informal lease extension will generally work on a rolling basis, generally up to a period of 6 months. The lease holder can continue to use the vehicle until collection is requested. The cost remains the same as the original lease agreement and is paid in arrears.

A formal extension will be longer in length and you will be required to sign a modified agreement to cover the extended term. A formal lease extension will generally be 6-12 months long and you will be offered a revised monthly fee based on the additional expected vehicle depreciation.

If you want to extend your lease contract you must contact your funder and once again is at their discretion. It can take up to 4 weeks to arrange, so we recommend making the request well ahead of your contract end.


For answers to many other questions that may help lease customers during COVID-19, head to our COVID-19 Leasing FAQ's