If you’re nearing the end of your lease contract, you may want to know what your options are regarding extending your lease agreement?
To help you to understand the options available to you, Nationwide Vehicle Contracts explain the different types of contract extensions available as well as the criteria, fees and the process involved in extending your lease agreement, otherwise known as a contract extension.
A contract extension is an agreement between you (the customer) and the finance company to extend the term of the lease contract beyond its original end date. With vehicle lease agreement, there are two types of contract extensions - Informal Extension and Formal Extension.
An Informal Extension is an informal agreement where the customer continues to use the vehicle beyond the contract end date until collection is requested. With an Informal Extension, the monthly rental of the original agreement remains and are paid in arrears. Informal extension is a short term solution designed to help bridge the gap between lease agreements. If a contract exceeds six months, the finance provider has the right to recall the vehicle.
A Formal Extension is a formal agreement between the finance company and the customer which allows the customer to extend the lease contract for an additional term, usually 6 or 12 months. A modifying agreement is sent to the customer detailing the extended term, extended term date and extended mileage agreement, along with the revised monthly rental. If agreed, the extended contract runs from the end of the existing contract.
A Contract Extension is subject to several criteria:
No, because this option is not available with all funders . A Contract Extension is at the discretion of the finance provider and is usually only allowed on Personal Contract Hire and Contract Hire agreements.
A Contract Extension will also not be provided where:
In the instance that a Contract Extension is required, Nationwide Vehicle Contracts Ltd will charge a fee of £95 excl. VAT subject to approval by the finance provider. The contract extension fee is payable by debit or credit card or by BACs payment and will be taken on receipt of your signed finance documentation detailing the amendment. Credit card payments will be subject to a 1.95% charge.
The process involved in a Contract Extension can vary case to case as it is often dependent on the funder. We advise that from beginning to end, the process can take up to 4 weeks so please bear this in mind when contacting us.
Have a question about extending your lease contract? Call our leasing specialists on 0345 811 9595 and select option 2 to discuss the options available to you.