Can I Terminate a Car Lease/Personal Contract Hire (PCH) Agreement?

Whether your circumstances have changed or you're considering a different car, it's important to fully understand what's involved before terminating a lease agreement.

To help, we’ve put together a useful guide that explores the various steps involved in ending an agreement early, and the alternatives available.

From whether you can terminate a car lease agreement, to how to go about it, read on for everything you need to know 👍 😀

Got a specific question in mind? Why not jump ahead:

Is it possible to terminate a car lease agreement?

There are situations where you can terminate a car lease agreement. However, it often comes with certain conditions and potential costs.

The process and implications of early termination can vary depending on the terms of your contract and the lender's policies.

Some agreements may include specific clauses about early termination, outlining any fees or procedures you need to follow.

So, while it is an option, terminating a car lease early will most likely cost you.

This could take the shape of paying a portion of the remaining lease payments, termination fees, or other charges specified in your agreement.

It’s important to thoroughly review your contract, and possibly seek advice to fully understand the implications.

How do I terminate a car lease agreement?

There are a few ways to terminate a car lease agreement, each with its own process and potential implications.

From cancelling within 14 days, to voluntary surrender – let’s explore your options when ending a car lease early:

14-day cooling off period

Like any type of car loan, if you’ve just signed a lease agreement, you typically have a 14-day cooling-off period. This means you can cancel the lease without penalty up to 14 days after the agreement was signed. This applies to all lease agreements under the Consumer Credit Act.

Early settlement

If you have the funds, it could be worth taking the early settlement option and paying off the lease agreement in a lump sum.

You'll pay a calculated amount that covers the remaining cost of the lease. Taking this option may enable you to make a saving in the amount of interest you’re charged, however there may well be early settlement fees you should factor into any decision.

Some lenders charge 50% of remaining payments, while others tailor it to your specific lease and any missed payments.

Voluntary Surrender

If you can no longer afford the repayments on the car, you can choose to voluntarily surrender it back to the lender.

This option will impact your credit rating, and it does come with a few penalties.

For example, you’ll still be liable for the remaining payments on the car. It’s a lot like repossession, only you’ll most likely be required to pay less with a surrender agreement.

Are there alternatives to terminating my agreement?

Before deciding to terminate your car lease agreement, it’s a good idea to consider alternative options.

Unlike hire purchase finance and personal contract purchase, it isn’t possible to refinance a leasing agreement.

The first thing you should do is contact your lender. They will be able to discuss your options based on your individual circumstances.

They may be able to offer solutions like a payment holiday, which can provide temporary relief if you’re experiencing financial difficulties.

This can be a good option to help you get back on track without ending the agreement.

So, speak to your lender to see what alternative options may be available to you.

Terminating a leasing contract early can have negative consequences on both your finances and credit score.

Read more about terminating a car finance agreement:


FAQs About Terminating a Car Leasing Agreement:

Can I hand back a lease car early?

Yes, you can hand back a lease car early, but it may mean you’ll have to pay early termination fees. Whether it’s worthwhile doing, depends on the terms of the leasing agreement, and the lender's policies.

Can you voluntarily terminate a lease?

Yes, you can sometimes voluntarily terminate a lease agreement. However, it is known as voluntary surrender. You can return the car if you can no longer afford the finance, but you’ll still be liable for the remaining payments.

What is a voluntary termination of a car lease agreement?

If you’d prefer voluntary termination instead of a surrender agreement, you can do this within 14 days of beginning the lease.

Under consumer law, you have a legal right to return the car and end the lease early without penalty within 14 days of the agreement being signed.