An extension means to move the agreed end date back and to have the cost stay the same. There are two types of extensions which are formal and informal and they do have some key differences and implications to the contract holder.
The ability to extend the contract on request is generally not written into the leasing contract. This means that extending that the finance company is not obligated to offer a contract extension and it would need to be formally requested before the end of the contract (for it to be a formal extension).
However, we often help our customers extend their contracts through a formal extension agreement. Alternatively, the finance company may contact customers directly to give them options towards the end of the lease.
If you feel that you may want an extension before signing the agreement we advise to instead increase the contract term as this may prove to be cheaper overall than extending.
As we previously mentioned, finance companies are not obligated to offer extensions and you may have requests rejected.
A formal extension is an agreed extension between the contract holder and the finance company. A formal extension agreement must be signed for it to go ahead. In the extension agreement the following will be stated:
The ability to apply for a formal extension may not be available for all funders. But, your two options are to contact the finance company directly or get in touch with us who may be able to manage the extension for you.
To be considered for the extension, you must not have missed or made any late payments at any time during the contract.
An informal extension describes the use of a vehicle past the contract end date/date the vehicle is to be collected. The term informal relates to there being an absence of an agreement in place.
An informal extension can happen through a few different circumstances:
Informal extensions usually keep the payments the same but the finance company reserves the right to collect the car with notice.
During the 2020 COVID-19 pandemic, extensions were unusually common as the finance companies were unable to collect vehicles due to social distancing measures. This either results in the vehicle being out of contract but at the customerâ€™s home, an informal extension or formally extended.