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