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Extending Your Lease Contract
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.
What is 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.
What is the difference between a Formal Extension and an Informal 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.
What is the criteria for a Contract Extension?
A Contract Extension is subject to several criteria:
- For Formal Extensions, a modifying agreement must be signed.
- If there are less than 3 payments outstanding, a new agreement will run from the end of the existing contract.
- A new rental will be calculated moving forward
- An administration fee of £95 exc VAT will be charged per vehicle
Can anyone apply for a Contract Extension?
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:
- A request has been submitted to add or remove maintenance or relief vehicle
- The existing account has arrears or is subject to Default or Insolvency
- The Modifying Agreement has not been completed in full
How much does a Contract Extension cost?
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.
I want to request a Contract Extension, what do I do?
- Read through the criteria list above to ensure you meet the requirements before calling us.
- Contact the Nationwide Vehicle Contracts Customer Renewals team on 0345 811 9595 (option 2) or via email us to request a Contract Extension . Please note, we will only be able to discuss a Contract Extension with the person named on the finance documentation and you must have your registration number to hand. Email requests can take up to 3 working days to be actioned so if your request is urgent, please call us.
- We will contact the funder to see if you are eligible for a Contract Extension and will be in touch to advise accordingly.
- If you are eligible, the new Modifying Agreement will be sent to us by the funder, along with any accompanying Terms and Conditions. We will then email these across to you. Please check the documentation carefully to ensure everything is correct.
- Print off the agreement on plain paper, sign the Modifying Agreement and return the documentation to the address stated on the email.
- Once we have received the signed documentation, we will send this to the funder for review. Please allow 3-5 working days for this to be received as the funder will not accept scanned copies of the agreement.
- You must continue to pay the monthly rentals until the Contract Extension is completed and a new contract end date is given to you.
How long will the process of contract extension take?
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.
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