Can I get out of my car lease or finance agreement early?

What Happens If I Want to End my Lease or Finance Agreement Early?

So you have your car, and then your circumstances change. Perhaps you have changed jobs, and no longer need a car. Or maybe you’re expecting a happy addition to your family that means you need to upgrade yourself to a bigger car within the next nine months.

But, your contract lasts for another eighteen months, what do you do?

Fear not, because you do have the option of cancelling your lease or finance agreement early.

However, it’s not quite as easy as posting the keys through the letterbox and walking away, I’m afraid.

The process for early termination can differ depending on whether you are on a lease contract or a finance agreement.

While we don’t go through this a lot at OSV, we do understand that circumstances change and that sometimes, people need to cancel their contract early. So, we have gone through this enough times to talk you through exactly what happens should you want to get out of your lease or finance agreement early.

What is the difference between a lease and a purchase agreement?

First things first, what’s the difference between a lease and a purchase agreement?

It’s pretty simple;

A lease is where you have a car for 1-5 years, paying a fixed monthly payment each month until the end of the contract. At the end of the contract, you hand the car back. The most common lease contract for an individual is a Personal Contract Hire.

A purchase agreement, however, is where you have a car and you pay a fixed monthly payment. But, you have the option to own the car at the end of it. The most common purchase agreement for an individual is a Personal Contract Purchase.

So, that’s the difference. This is important because depending on whether you have a lease or a purchase depends on what process you will go through should you want to cancel your contract early. For more information on the different types of finance agreements.

What Happens If I Want to Get Out Of My Lease Contract Early?

If you want to get out of your lease contract early then the following things will happen;

  • You will contact the finance house and tell them that your circumstances have changed and that you want to terminate your contract early.
  • They will then ask for more information, such as the current mileage on the car.
  • After that, they will present an early termination fee, which will be based partly on what price they can sell the car for.
  • This will be the termination figure. This is what you have to pay in order to terminate your contract early.
what happens if I want to get out of my lease or finance agreement early

How much will the termination fee be?

It depends. There are many things that determine the cost of the termination fee and those are;

can I get out of my lease or finance agreement early
  • The residual value
  • How much your payments have been
  • How far into your contract you are
  • Your mileage

So, we can’t predict how much the early termination fee will cost you. Sorry.

What Happens If I Want To Get Out Of My Purchase Agreement Early?

It is slightly easier to get out of your finance agreement than it would be a lease contract. But there are things you need to consider first.

You can get out of your Personal Contract Purchase at any time after you have paid 50% of your monthly payments. However, you will still have to pay the remainder. This can be calculated by;


  • Adding up the deposit, the final balloon, and the monthly payments
  • Dividing it by two


That’s how you work out how much you have to pay. It’s pretty simple, right?

However, finance house have been known to set the balloon payment just out of early termination reach. So, cancelling your contract early might not always be the most financially viable option.

What Should I Consider Before Leasing?

Now, if you’re reading this because you are considering leasing or getting into a finance agreement, but you think your circumstances might change then there are some things that you should consider;

  •  How likely are you to see the contract out?
  • What is your financial situation?
    • If you are financially stable, then lease away, my friend.
  • How stable is your job?
    • If you’re considering a career change then, unless you have something lined up straight away, leasing probably isn’t advisable.
  • Are you planning on making any huge changes?
    • I’m not trying to be your mum here, but have you thought about your future?
    • For example, you don’t want to lease a huge BMW but then move into Central London and only have a parking space big enough for a Smart Car.
    • Again, not trying to sound like your mother, but will there be any fun additions to your family? It would be quite frustrating if you leased a sports car then realise that you’ll have to fit a carseat in it.
can I get out of my lease or finance agreement early

Whether you want to get into a lease contract or purchase agreement is up to you, obviously, but to avoid unnecessary termination costs then it wouldn’t hurt to consider those points.

Ultimately, you can get out of your lease contract or finance agreement early. However, you will be subject to an early termination fee. Whether this is a financially viable option is down to your individual situation.

But hopefully, this article has cleared a few things up for you in terms of getting out of your lease contract or finance agreement early.

ultimate leasing guide

Holly Martin

Content Co-ordinator at OSV Ltd
Holly enjoys: Reading, music and spending time with friends.

Within a week of Holly starting work at OSV she became an indispensable part of the marketing team. She's very intuitive and gets on with the whole office effortlessly.
Holly Martin
  • 16th September 2016

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