Handing back a car lease might not be quite as simple as returning that Primark jumper, but you'll still be able to.
Maybe personal circumstances have changed and you're relocating or facing redundancy, or maybe you'd like to take advantage of a new deal to cut costs.
Either way, you want out . . . and the good news is that you'll usually be able to cancel your car lease agreement.
In this post, we'll tell you how.
Where Can I Find My Cancellation Rights?
In your car lease agreement.
Your lease finance agreement (also known as a contract hire agreement) outlines the early termination conditions along with any fees that you'll incur. It will be sent to you when you take out the lease and you'll have to sign it before accepting delivery of the car.
If you've lost your car lease agreement and are in need of a new copy, then just contact the relevant company and they'll arrange for a new document to be sent to you as soon as possible.
What Are My Cancellation Rights If I Cancel Before My Car Arrives?
Cancelling your lease agreement before the car arrives at your doorstep is probably the easiest way to go about it.
That's because you get a 14-day cooling off period during which you can cancel your lease agreement if you decide that it isn't for you. The only condition to qualify for the cooling off period is that you must be a 'regulated customer'.
You are a regulated customer if you are:
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A private individual
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A sole trader
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A partnership with less than 4 partners
If you're one of those, then happy days!
What Are My Cancellation Rights If I Cancel During My Contract?
Contact your finance company, tell them that you want to cancel, and they'll then come up with an early termination fee. If you accept the fee, you will then pay it and they'll pick the vehicle up. Could not be simpler.
Note that you'll still be subject to condition charges, as you'll have to hand the car back in a condition that complies with the BVRLA's Fair Wear and Tear regulations.
How Much Does It Cost To End A Car Lease Early?
Like with any financial commitment, there's usually a penalty attached with ending your car lease early. You can pay a cancellation fee, also known as an early termination fee, but the exact cost will depend on a number of factors and can vary from funder to funder. The fee is not set in stone and some companies can expect you to pay more or even all of your remaining outstanding monthly payments.
That being said, the early termination fee cost is generally 50% of the remaining monthly lease payments. For example, if you’re paying £300 a month and still have 18 months left on your contract, then the early termination to cancel your lease agreement will be £2,700.
Payment of the early termination fee can be made via BACS or CHAPS and you'll have to quote the vehicle registration number as the payment reference number.
You might also be responsible for other fees when handing back your lease vehicle early, such as having to pay to return your vehicle or even for storage costs for the lease car, but these are unlikely.
Can I Cancel Without Penalties?
Unfortunately not. There's usually some form of penalty, but depending on the method you take to cancel, it doesn't have to be a huge one.
If I Return My Lease Vehicle Early, Will I Get the Initial Rental Back?
Afraid not.
The deposit or initial rental is paid to the finance provider at the start of the agreement and contributes towards the cost of the overall lease, so unfortunately it's not something that can be recuperated.
The price of your initial rental will vary depending on which option you choose; typically, you can pay 1, 3 or 6 months' worth of payments upfront. Obviously, if you put down a higher initial payment, then your monthly rentals will be cheaper. Just remember that you won't get the money back at the end of the lease.
Luckily, there is such a thing as leasing deals with no deposit, so if you did find yourself in a situation where you have to return your lease car early, you won't be losing out as much this way.
How Long Does the Early Termination Process Take?
It's not exactly the same each time, and the early termination process can vary from case to case and from funder to funder (tired of hearing that yet?). But generally speaking, from beginning to end, you can expect the whole process to take between 3 to 4 weeks.
Do I Have Any Other Options?
Remember, it’s in the best interests of the lease company to help you out and make the payments, so they could offer you a longer credit time, meaning your remaining monthly payments would go down but you'd keep paying them for a longer period of time.
In an ideal world . . . probably not what you wanted, but it could still help you get out of a rut.
Alternatively, you could request a car lease transfer (also known as 'lease trading'). This allows you to pass responsibility for the car onto someone else who'd take over the monthly payments. It can be done via lease transfer websites like Swap a Lease. What you'd do is make a listing of the car (much like you would when selling a vehicle), and then anyone who's interested can make an approach and arrange for the transfer.
Only thing is . . . car lease transfers aren't allowed by every single leasing company, so check your lease contract to find out if it's permitted. If it's allowed, then you'll likely find a taker as drivers are always on the lookout for cheap, short-term leases. Just bear in mind that most of these websites charge a small fee for listing your car. On Swap a Lease, for example, you'll be charged £39.99.
Another option would be to voluntarily surrender the lease car. This is similar to repossession, but with fewer penalties attached. It's still not an ideal option though and should only be pursued as a last resort.
Will Ending My Lease Affect My Credit Score?
As long as you do so in a smooth way and don't default on the payments, then your credit score shouldn't be significantly affected, but it will still appear on your credit report.
So not ideal, but never an end-of-the-world scenario.
If you are seriously in desperate straits, don't hesitate to contact your company before missing a payment. They can discuss your options and try to come up with the best solution for you without seriously damaging your credit.
Summary
In conclusion, yes, you do have a right to cancel your car lease agreement, but depending on your situation, it can sometimes be difficult.
And yes, we know that car finance agreements can be boring and full of incomprehensible jargon, but it's vitally important that you read yours in order to know what's possible in your particular situation.
FAQs
Can I cancel a lease car agreement?
Yes, but depending on the circumstances and how many months' worth of payments you've got left, leaving a lease contract early can lead to fees or negative credit score implications.
What is the cooling off period for a leased car?
Once the car is delivered, your contract will have a 14-day cooling off period.
Can you cancel a car lease before delivery?
Yes. In fact, that's probably the best time to do it, as the leasing agreement only begins once delivery is made.