Car finance is on the rise, but it is important to get clued up on potential end-of-term costs ahead of time and make sure you understand the deal you’re being offered.

Below are five things that could leave you with unexpected costs:

1) Returning car keys

All keys received with the vehicle must be returned including the spare key and the wheel-nut keys. If you don’t return your spare key you could be charged up to £450. Store them in a safe place and don’t use them unless in an emergency.

2) Mileage limits

If you return the vehicle with more than your contracted mileage limit then you may be charged. The amount you pay will be calculated based on how many additional miles you have done. For example, if you return a car with 35,000 miles on the clock rather than the 30,000 mileage limit with a typical 10p a mile mileage excess charge this would quickly mount up to £500. Carefully working out your usual mileage by checking your MOT or service records can help ensure you aren’t hit with an additional payment.

3) Keep your car in good condition

Your car will be inspected on return for any excess damage that is not deemed fair ‘wear and tear’, and you’ll be liable to pay any excess damage in the form of a lease-end penalty charge. It’s usually cheaper to arrange repairs yourself than getting charged for the damage by the finance company, so plan ahead and have any notable damage sorted out before returning your vehicle.

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4) Servicing

All customers are required to have their vehicle inspected, maintained and serviced according to the manufacturer’s servicing schedule and recommendations, so you’ll need to return a fully stamped service book at the end of the contract. You might find that it’s less expensive and more convenient to use a local garage instead of a main dealer, so shop around and compare costs.

5) Make all monthly payments on time

Ensure you settle the monthly payments on time, as failure to do so can hurt your credit score in the long run and could also lead to the repossession of your vehicle.

If you break any of the above conditions, you can expect to incur additional charges.

Shaun Armstrong is managing director of car finance provider Creditplus.co.uk

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