Can I get out of a lease agreement early?

Leasing a car can be an affordable way to drive the car you want, especially if you’re a sucker for a brand new model kitted out with the latest tech. But, the catch is that you have to commit for a good chunk of time - anything up to five years. A lot can change in that time, and your lease might not be right for you anymore. 

So what do you do if you feel like you’ve reached the end of the road with your car, but you still have a fair old way to go before your lease is up? You’ve come to the right place - let’s take a look at your options.

Understanding your car lease agreement

Every lease company is different, and will have their own way of doing things when it comes to ending agreements early. It’s usually not a simple, easy thing to do, and it’s typically not free either. Probably not surprising - it makes sense that leasing companies would want you to stay on board all the way through to the end of your contract. The specific process - and fees - will depend on the company you’re leasing with.

If you’re thinking about getting out of your lease agreement early, the first thing to do is dig out your contract. If ‘early termination’ (the official name for ending your agreement early) is an option, it’ll say so somewhere in your paperwork. It’ll also tell you what the process is, and how much you can expect to be charged.

Why would you need to end your lease early?

There are tons of reasons why you might want to get out of a car lease before the official end date. You sign a lease for three, four or five years, and there’s no guarantee that your circumstances will be the same at the end of that time.

Life is unpredictable, and none of us knows what’s around the corner. In the months and years after you sign on the dotted line, your circumstances could change and your car might not suit your needs anymore. Your family situation could change, and you might need a bigger or smaller car to ferry everyone around. Or, your finances could take a hit, perhaps because of losing your job or having to deal with a crisis, and you might find yourself struggling to keep up with your monthly car payments.

What are the options for ending a car lease early?

There’s more than one route out of your car lease, so if you’re thinking of calling time on it, check out your options before you decide which way to go.

14-day cooling off period

If you’ve signed your car lease agreement, and you’ve realised it’s not right for you, you will have a legal right to a 14-day cooling off period. This right governed by the Consumer Credit Act gives you the option to cancel the agreement and walk away without any penalty up to 14 days after you signed the agreement.

Lease transfer

Lease transfer does what it says on the tin, and transfers your lease agreement to another person. You would need to find someone to transfer your lease to, and they would take on the legal responsibility for your lease, your car, and all the responsibilities laid out in the lease agreement. It’s not done very often, and not all car lease companies allow for it.

Voluntary surrender

Voluntary surrender is seen as very much a last resort, typically used by people who are having serious financial difficulties and can’t carry on making their repayments. Under voluntary surrender the vehicle will be taken back by the lease company and you’ll still be liable to repay the remaining repayments.

Speak to your lease company to see if this solution would work for you.

Will it impact my credit score?

If you bring your car lease agreement to an early end, your credit score won’t usually be affected, as long as you pay the termination fees on time. 

If you’re having trouble keeping up with your repayments, contact your lease company - they’ll be happy to talk about some options that could help you end your lease without doing too much damage to your credit score.

How much will it cost to end my lease early?

Unfortunately, if you want to end your car lease early, you probably won’t be able to do it for free. Your lease company may charge you a fee for early termination, and the specific amount you’ll be charged depends on the company you’re leasing from.

Some companies charge as much as 50% of the monthly payments you still have left, whereas other companies work out the fee on a case-by-case basis, taking into account the length of your contract, whether you’ve gone over your mileage allowance, and how much of the balance is still left to pay.

The final amount you need to pay will also include any fees for excess mileage, as well as fees for any damage or wear and tear to the car. 

It’s not a one-size-fits-all situation, so check your lease agreement paperwork to see what sort of fees you’ll be looking at.

What’s the process?

Every company has their own process, but the first step is always to get in touch with your lease company, and let them know your situation. They’ll talk you through the terms of your contract and your cancellation rights. They’ll consider your circumstances and give you a quote for your termination fee - as we mentioned earlier, this can be up to 50% of the balance that’s still left to pay on the agreement.

Can I negotiate with my leasing company?

When you speak to your leasing company, be open and honest with them about your situation. They might be able to help you stay in your contract, perhaps with a different payment plan that suits you better. 

If you’re looking to exit early because of financial reasons, it’s worth talking to them about any alternatives they can offer, as it’ll be better for your credit score if you can see the contract through. Either way, you can weigh up the options and make an informed decision on the right way forward for you.