Can I Terminate a Car Lease Agreement?
It’s totally understandable if the prospect of leasing a car makes you stressed. What if you don’t like the car anymore? What if your family grows and you need something bigger? What if you move and the car doesn’t fit in your parking space? What if you can no longer afford it? All in all, leasing just doesn’t seem flexible, and it can be scary. 😱
So, you’re now thinking: “Can I terminate a car lease agreement?”. Well, terminating a car lease agreement sure isn’t an easy feat, but it is possible. In this article, we’ll be going over what rights you have to terminate a car lease agreement, how much it could cost you and what your other options are. Let’s dive right in!
Is It Possible to Terminate a Car Lease Agreement?
The UK Consumer Credit Act makes it the law that you have the right to cancel any contract within 14 days. It is a statutory right, and it means that anytime you buy something, whether it’s online or face to face, you can cancel your purchase and get the entirety of your money back if it’s within 14 days of the purchase.
If you want to terminate your car lease agreement within 14 days, you have the absolute right to cancel the contract without even having to give an explanation or have to pay a cancellation fee. Your car finance provider or dealership will refund your initial payment to you, if any.
After 14 Days: Voluntary Termination
However, once it’s been 14 days, the rules change. You will have to go through something called ‘voluntary termination’ if you want to cancel your lease agreement, and you’ll most likely have to pay penalties. The UK Consumer Credit Act only caters for the fourteen days after the date of the purchase, so anything beyond that isn’t protected.
Before we go any further, do bear in mind that these parameters will depend greatly on your car finance provider/credit broker. You may find the circumstances to be different in your situation. That’s why it’s really important to check the terms of your agreement before you sign it, so that you know what to expect and don’t discover any unpleasant surprises.
How Do I Terminate a Car Lease Agreement?
You can ask for voluntary termination at any time during the course of your lease agreement. It will mean that you are ending the contract before its official end date. You’ll pay a set fee, which your car finance provider will have established beforehand, and then return the car. If you want to find out what your termination fee will be, it is written in your finance agreement. Make sure you check it because this fee is at the finance company’s discretion, so it can change quite drastically from one lender to another.
You could choose to settle the voluntary termination fee in two different ways.
- By paying whatever remaining monthly payments you have left on your contract. This will work well if you only have a bit left on your agreement, but if it’s just the beginning of your lease contract, you’ll have to pay a huge chunk of the car’s value, so it just doesn’t make sense.
- By paying the set voluntary termination fee, which is often offered to people who wouldn’t be able to go for the former option. You’ll probably have to pay around 50% of all remaining months left on your agreement, and probably an extra charge for any admin work. Your car finance provider has no real legal obligation to let you pay the voluntary termination fee after 14 days of the contract start date, so don’t count on this option 100%.
It’s also good to note that you’ll need to pay for any damages you’ve incurred on the vehicle, according to the BVRLA fair wear and tear principles, which will have been disclosed to you by your finance provider. You could also have to pay any excess mileage if you’ve driven more than you were allowed to. Another reason why thoroughly looking into your car finance agreement beforehand is crucial!
What Else Can I Do?
If you find yourself in a situation where you’re struggling to make ends meet at any point during your car finance agreement, it’s a good idea to contact your provider. They’ll want you to keep paying your monthly payments and not go rogue, so they’ll most likely try and help you out.
They might offer to spread out the cost more, by making your agreement term longer. This means that you’ll be paying less every month, but for a longer period of time. You’ll find that you’ll be paying more overall this way, because of increased interest, but it might be the only solution if you’re not in a position to be paying the voluntary termination fee.
Transferring Your Car Lease to Someone Else
Your final option would be to try and transfer your car lease to someone else. That’s what is called lease trading, and it will only work if it says you’re allowed to on your car leasing contract. If it is stipulated that you can, then you’re very likely to find an interested buyer. People are often looking for short-term, cheap leases.
You can do this using a website such as Swap a Lease, or any other lease transfer website. These websites let you make a listing for your car, just like you would when selling a vehicle. Then, an interested lease-transfer seeker will approach you and you can arrange for the transfer. Do bear in mind that you’ll be charged a fee by the website for listing the car. On Swap a Lease, for example, it will cost you £39.99, but it may be more or less expensive on other websites.
The Bottom Line
Yep, you’ve probably got to here thinking that properly reading your car finance agreement is soooo important. It can help you be confident and know whether or not you can:
- Terminate your car lease early
- Pay an early termination fee (and how much that fee will be)
- Transfer your car lease to someone else
- Get away with not paying any extra costs for terminating your lease early
But yes, we know that car finance agreements can be:
- Boring
- Hard to decipher
- Full of incomprehensible jargon
- Inaccessible
- Too small to even read
That’s why here at Carmoola we’re so passionate about giving you all the information you need to cruise through your car finance experience. You can reach out to us at any time or read through our blog which is brimming with the car finance gems you need the most. 😊🚗
