The bad news is that your lease vehicle is up for inspection soon, to see if you contravened allowable guidelines for wear and tear and damage.
The good news is that the lease-end inspection process is much more fair, efficient, consistent and transparent than it used to be.
And there are ways to minimize the wear and tear charges and even possibly completely eliminate them. (See our list of lease-end inspection safety tips featured at the end of this piece.)
How it used to be
There can be, and still is, some acrimony in the process, but a few years ago there was considerably more. Back then, usually dealership personnel would be the ones to evaluate the car, and sometimes even after you’ve already taken off in your new lease vehicle. Then a month or so later an invoice would arrive in the mail—sometimes with acceptable charges, sometimes with a pile of pain.
Jim Matthews, president of LeaseBusters, characterized the old system as “a complete abomination.”
He notes the conflict of interest, as a dealership would sometimes have a vested interest in the assessment of a customer’s vehicle (there are scenarios for a dealership benefiting from both good and bad reports), and the lack of consistency in the inspections.
But he notes that the biggest bone of contention for sure was the “after-the-fact” invoice, which surprised in a bad way, and closed the door to fixing the wrongs on your own—and possibly cheaper—terms.
Third parties and transparency
Over the last two or three years, the industry has more or less moved to a new lease-end inspection protocol, where large, nationally-operated inspection firms, such as DataScan and AutoVin, conduct the inspections.
As a result, Matthews feels the process is “getting much better,” for both consumers and the industry.
DataScan has been conducting lease-end inspections in Canada since 1995, and now provides the service for more than 10 of the country’s major leasing companies and automaker financing arms. “Independent third party inspections provide an unbiased assessment of the vehicle’s conditions,” says Richard Carpentier, Managing Director, DataScan Fields Services Canada. “DataScan leverages trained field inspectors nationwide who follow a set of standards to produce consistent and accurate condition reports.”
Carpentier adds that each leasing company client has its own specific guidelines about what constitutes a chargeable wear and tear item.
DataScan conducts both “post term” and “pre-term” inspections. Pre-term is the way to go if you don’t have insurance against wear and tear, and it’s obvious your vehicle is going to be needing some TLC before you turn it in.
Honda Canada, for example, will send out a letter notifying that an inspection company will be contacting you around 45 days prior to lease end. The parties then arrange a suitable date and location for the inspection. The location can be the customer’s home, place of employment, the dealership, or any agreed-upon site. The customer can be present for the inspection, which takes about 30 to 40 minutes.
“Lessees will receive a paper copy of their inspection immediately,” says William Hope, Manager of the Lease Maturity Centre for Honda Canada Finance. “The inspection lists all exceptions but not estimated cost; the lessee is provided a website and can view their inspection online within 48 hours, in which all estimated charges will have been completed.”
If you think you can get the exceptions fixed cheaper than Honda, go ahead and knock yourself out.
“Lessees generally have the items fixed following the inspection,” says Hope. The lessee then just needs to provide confirmation via receipts, and then the final invoice is adjusted accordingly. Second inspections are only completed if there has been an excessive amount of damage repair.
Don’t be shy, negotiate
If you don’t completely agree with the report, you can try and negotiate. Hope says Honda customers can either call their dealership or Honda Canada Finance directly.
LeaseBusters’ Matthews believes that the service reps on the phone lines at most leasing companies can exercise some discretion about lowering charges — but not much. “Maybe 10 to 20 percent of the charges, kind of what you could expect from the major cell phone guys.”
He also notes that the leasing salespeople will have some negotiating to do on their own. When customers are unhappy about the amount of charges, they will often offer to waive them, if customers are willing to re-lease. Matthews says to turn this around and present that same amount to a competing leasing firm or automaker, and see if they would be willing to offer you a discount equal to that amount, as a reward of sorts for jumping leasing ships.
But being proactive right from the start of the lease is your best strategy for minimizing your pain at lease end.
All the lease players now offer very specific — and clear — guidelines about wear and tear, and their associated charges. Know these guidelines and charges from day one of the lease. This allows you to adjust your driving habits accordingly, and also gives you lots of time to economically address issues you know are never going to pass the inspection. But Mathews does note, however, that the automakers’ charges for damage repair have come down quite a bit of late, and even calls them “very fair.”
Now it’s time for our top safety tips, to make sure your vehicle aces the lease-end inspection report.
Top tips for lease-end inspections
• Purchase excess wear and tear protection plans — Depending on the value of the vehicle, these plans can run about $500 to $1,000. The Honda product is called Lease Guard Insurance. Matthews thinks they are “terrific” and highly recommends them. Not only do you not have to worry about extra charges, if you need to get out of the lease, and you engage a firm like LeaseBusters to find you a suitable person to take over the lease, your vehicle is instantly more desirable than all the other lease vehicles trying to find new homes.
• Repair windshield chips — If there is something not up to grade about the windshield, the leasing company will typically charge you for a complete replacement. If a crack or chip can be repaired, get it repaired.
• Measure tire tread depth — Have your dealership or independent technician professionally measure the tread depth on the tires, to determine if they will pass or fail the allowances for acceptable tire wear. If they don’t, replace them with a matching used set that does. And remember to make sure they confirm to the OEM’s requirements for speed and load ratings. If you do anything less, they will ding you for a complete new set, or at lease a new pair.
• No winter tires — If you show up for the inspection with winter tires, and it’s not winter, many lessors will charge you for a set of all-season tires. Only show up with winter tires in winter, and only with winter tires that meet the OEM’s requirements. Otherwise, well, you know the drill…
• Clean the vehicle — Nothing says “my driver didn’t look after me” like a filthy car. Don’t arouse unnecessary suspicions. Keep it clean.
• Display maintenance records — You are responsible for maintaining the vehicle according to the manufacturer’s recommendations, so documents proving that will only help your cause. But maybe don’t go overboard with the maintenance, as inspectors don’t really validate what maintenance items have, or haven’t, been performed on the vehicle. They will check some fluids and filters for sure, but their primary mission is to establish if the vehicle is in good working order, or not.
• Bring everything back — Whatever came with the vehicle has to be returned with it: extra keys, owner’s manual, steering wheel, transmission, etc.
• Act like you’re the buyer — “Perform a walk-around, like you’re buying the vehicle,” says Jim Matthews of LeaseBusters. “What do you see that you don’t like? What would make you not want to buy this vehicle?”