Insurance contracts, equity funds, terms and conditions – oftentimes, there is profit to be had when things are so complicated that the customer simply accepts the conditions. Parallels can sometimes be seen in closed-end leasing contracts. Take tacit extensions, for example.

A tacit extension on a closed-end contract occurs when you use your leased vehicle longer than originally agreed. This is usually for a good reason, such as if your next vehicle has not yet been delivered or plans have changed. Using tacit extensions is convenient, and they are therefore touted as superior service. But is this service really so altruistic? Here’s how it works.

For a lessor who has agreed to a closed-end contract, there is hardly anything better. Why? The leasing rate usually continues at the same level, but the car loses much less value at the end of the term. In practical terms, this means that in the end, the lessor can sell the vehicle at a higher profit. The longer the tacit renewal, the higher the profit. Calculating this is not exactly easy. Our sample calculation below uses a real example with real final billing figures and presents the results in a simplified manner.

In our example, the vehicle had to be used longer than agreed, even after a contract adjustment. The cost of the “tacit renewal” for 2.73 months: € 1,119. In these months, however, the vehicle has depreciated by only
€ 350. So, what happens to the difference? It belongs to the lessor.

Our tip: Do the math. There are also forms of financing in which this effect reduces your financing costs and does not increase the profit of the lessors. We will be happy to advise you.