What are my cancellation rights when leasing a car?
Things happen. Circumstances change. We get that. And sometimes, those circumstances lead us to wanting to cancel our lease contract.
Can you?
Firstly, cancellation rights vary. They depend on what sort of contract you have and which finance house you go through. And it’s not going to be the same for everybody. It also depends on when you want to cancel your lease contract.
While this doesn’t happen very often at OSV, it has done in the past. So we’re going to explain whether you can cancel your lease contract, and what your cancellation rights are.
Before we start, we should explain what cancellation rights we are talking about.
This is because before you sign the terms and conditions of your lease agreement, you are covered by consumer rights. These are the rights that protect all consumers. However, as soon as you sign that contract, you waive those rights. Your cancellation rights are now in line with whichever finance house you have gone through. So, in this article, we are talking about after you have signed your contract.
Where can I find my cancellation rights?
You can find your cancellation rights in your terms and conditions. This is why it’s really important that you read them carefully. They will include your early termination terms and conditions as well as the cause for these actions. These include things such as;
- Breaching your agreement
- Late payments
- The vehicle being lost or stolen whilst in your possession.
Like I said before, cancellation depends on the contract and which finance house you go through.
What are my cancellation rights if I cancel before my car arrives?
If you’re waiting for your car to be delivered and suddenly you start to have second thoughts, what happens?
Well the good news is, you can cancel your order. If you are a ‘regulated’ customer, you get a cooling off period. This is fourteen days where you can change your finance agreement. This does not cancel your car, however. If you decide that a personal contract hire isn’t for you, and you want to change to a personal contract purchase, you can do so.
How do I know if I am regulated?
You are a regulated customer if you are:
- A private individual
- A sole trader
- OR a partnership with less than 4 partners
This is according to the Financial Conduct Authority (FCA).It should be noted that if you are unregulated, you do not get the cooling off period. You are unregulated if you are:
- A limited business (Ltd)
- A partnership with 4 or more partners
This means that as soon as you sign, your order stands. If you choose to cancel after that, you will likely incur charges.
What are my cancellation rights if I cancel during my contract?
Now, what if you need to cancel your lease during the contract?
Firstly, lease contracts aren’t really designed to be cancelled. However, that’s not to say they can’t be. It’s just a bit more complicated than you may have hoped.
Also, it depends on what contract you have.
What are my cancellation rights with a contract hire agreement?
If you want to cancel your contract hire agreement, this is what happens.
You will have to speak to the finance house about early termination. With a contract hire, there will be an early termination fee. Your terms and conditions will outline the penalties and any cancellation fees. If you accept the fee, they will pick the vehicle up and you’ll pay it. Simple.
It should be noted that you will still be subject to condition charges. You have to hand your car back in a condition that complies with the BVRLA Fair Wear and Tear standard.
What are my cancellation rights with a personal contract purchase?
If you choose to cancel your personal contract purchase agreement, then what happens depends on how far along in your contract you are.
If you have paid 50% of the total amount payable then you can terminate the contract without charges. But, you must speak to the finance house because fair wear and tear will apply. I know from personal experience. I had paid over 50% of my personal contract purchase, but when I chose to end it two months early I was charged for some damage. So, check your BVRLA Fair Wear and Tear Guide.
Can I sell my lease car on instead of handing it back?
Now, this only applies to contract hire and operating lease, both for personal and business use.
If you want to sell your lease car on instead of simply handing it back, then you can. This is what you have to do:
- Ask the finance house for the early termination fee and the purchase price
- Add the two figures together – this will give you the price to technically buy the vehicle
- Advertise the car yourself – how you do this is entirely up to you
- This overall will cost you less than paying the early termination fee and simply handing the car back.
Can I reassign my lease contract?
So, you’ve decided that you don’t really fancy paying the early termination fee. Nor do you fancy selling it on. Is there another option?
You can, in fact, reassign your lease contract. But, not all lease companies will allow this. It’s quite rare but it can happen. Firstly, you need to find someone who will actually take over your lease contract for you. Then you need to get permission from the finance house. The person you are reassigning the lease contract to will then ring the lease company to propose themselves. That person will then have to be approved and will have to sign the relevant documents. And then, it’s done.
If you have a business lease, you can only reassign the contract to another business. If you have a private contract, you can only reassign it to a private individual. So, your cancellation rights differ from the consumer rights that you have before you sign the contract. When you sign that contract, your cancellation rights are determined by your contract and the finance house you go through. However, should you choose to cancel your contract, you do have options. You can either; pay the termination fee, sell it, or reassign your contract. Alternatively, if you’ve got a personal contract purchase and you’ve paid 50% of the total amount payable, then you can just hand it back.
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31 Comments
Hi I have just signed a personal lease agreement yesterday and paid the admin fee to allow the deal to go ahead. I have contacted by the lease company today to be informed that there is a delivery charge for the vehicle to my home because of the distance from the dealership to where I live. At no time during the process of agreeing and signing the lease agreement was a delivery charge discussed. There is no mention in either the invoice or the agreement. Do I have to pay this charge? or should it be the responsibility of the lease company
Hi there Trevor, thank you for your query. The delivery charge should have been discussed and included in the agreement prior to signing. If it was not discussed and is not included in the agreement, then you are not obligated to pay the charge. It should be the responsibility of the lease company to cover the delivery charge. You should speak to the lease company and explain that you were not aware of any delivery charge prior to signing the agreement and that you were not informed of the charge in the agreement or invoice. If they refuse to cover delivery charges, ask for a refund and we will be happy to help you with your replacement vehicle without hidden charges. Get in touch on 01903 538835.
We dropped the car off at Kia in Crewe lease went home in are new car now we get a letter 5 days later saying there’s £693 worth of damage no way should the staff have looked at the before we left Kia thanks
Hi there Kenneth, thank you for your query. There should have been an appraisal of the car when you returned the vehicle – if this was not done it’s going to be difficult for either side to evidence who had done the damage. We would recommend reaching out to Kia immediately to explain the situation and ask for a resolution. If you have any photographs of the car when handing the vehicle back, this will support your case.
Hi, I have a leased car since january 2022 and about a month ago had a fault on the dash, I have called the leasing company and told about the fault and they advised me to go the dealership to get the car checked, so I did it obviously. They have done something to try to fix the issue in one full day. I took the car back and after a week the same fault appears again. I emailed, called the leasing company telling them that i wouldl like to reject the car, not even 6months old and already has issues, tried to fix it ones but not successful, Is it in my rights to reject a car after the same fault appears and not been fixed within the 6months period? I don’t trust this car in terms of reliability and is not fit to purpose, i have opened a case about the issue and emailed the leasing company and they will give me a response. Have I done things right? I have told them about the issues from the beginning and gave the dealership the chance to fix the issue
Hi there Yu, Thank you for your question. We are not a legal advisory service.
As you can see, according to the CRA 2015 (Consumer Rights Act), you have:
1. Short term right to reject – The consumer can reject the vehicle and receive a full refund if a fault exists, or any of the expectations have not been met within 30-days from the later of:
– The transfer of ownership (or possession, if hired or under a purchase or lease agreement) as stated in the agreement
– Delivery of the vehicle
– Notification of installation
2. Repair or replacement – If there is a fault within the first 6-months the consumer can demand that the trader repairs or replaces the vehicle. The trader has “one shot” at repairing the vehicle, this must be actioned “at no cost to the consumer, within a reasonable time and without causing the consumer significant inconvenience”.
3. Rejection or price reduction – If the repair is not successful or another fault appears the consumer can reject the vehicle and receive a refund. The trader is allowed to make a deduction for use of the vehicle, the calculation of which must be consistent for all customers. Alternatively, the consumer can keep the vehicle but the trader must apply an “appropriate” price reduction agreed to by the consumer.
However, we would recommend you contact the Broker for further information on what to do next.
Suzuki Vitara. We picked up 29/03/2019. Catastrophic failure last week, blew the head gasket, spat all it’s water/coolant out. Engine totally cooked. Head possibly warped, pistons who knows, bolts knackered.
Serviced as per MFR’s guide. Only 14,000 miles on the clock.
Issue arises (possibly) that it was a pre-registered car (Dec 2018). According to Suzuki T&C’s (3 years warranty) it now falls outside that.
To be fair, our lease financer (so far) have been pretty understanding – lets hope they still are when they get the bill as, in our opinion, the standard of this car is not acceptable under The Consumer Rights Act 2015. Did I mention it went back 7 times for a brake issue too ?
Never, ever, ever would I have a Suzuki again. Ever.
Hi,
We received a delivery of our A7 on 17 March 2021, after 1.5 months the vehical starts shows faults with its security features and problem with the front suspension as dealer forgot to take out the suspension blockers during PDI checks. Now we are reluctant to drive the car as it may have caused some structural damages.
Can we cancel our contract with the finance House as the vehical not fit for purpose?
Hi Abishek,
Thank you for your question. We are not a legal advisory service.
As you can see, according to the CRA 2015 (Consumer Rights Act), you have:
1. Short term right to reject – The consumer can reject the vehicle and receive a full refund if a fault exists, or any of the expectations have not been met within 30-days from the later of:
– The transfer of ownership (or possession, if hired or under a purchase or lease agreement) as stated in the agreement
– Delivery of the vehicle
– Notification of installation
2. Repair or replacement – If there is a fault within the first 6-months the consumer can demand that the trader repairs or replaces the vehicle. The trader has “one shot” at repairing the vehicle, this must be actioned “at no cost to the consumer, within a reasonable time and without causing the consumer significant inconvenience”.
3. Rejection or price reduction – If the repair is not successful or another fault appears the consumer can reject the vehicle and receive a refund. The trader is allowed to make a deduction for use of the vehicle, the calculation of which must be consistent for all customers. Alternatively, the consumer can keep the vehicle but the trader must apply an “appropriate” price reduction agreed to by the consumer.
However, we would recommend you contact the Broker and request (in writing) an outline of the fault that has been found in the first instance.