What are my cancellation rights when leasing a car?

When you lease a car, it's important you know your cancellation rights...

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.

terms and conditions

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?

checklist

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.

terms and conditions displayed on computer screen

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:

what are my cancellation rights
  • 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.

handing over keys

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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Andrew Kirkley

Director at OSV Ltd
Andrew enjoys: Movies and travelling to new cities to explore different cultures.

Andrew has been in the motor trade for over 20 years. What he enjoys most about his job is the team spirit and the dedication of his work colleagues. He also appreciates the teams input in the improvement of the company.
Andrew Kirkley

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18 Comments

  • Sam| 18th September 2019 at 12:04 am Reply

    Hi we just bought a car on finance but we are yet to pick it up but I have changed my mind I no longer want it.. While we were at the dealers we were put in so much pressure to get it.. Please advise if by law I can refuse to take the car thanks

    • Rachel Richardson| 19th September 2019 at 12:52 pm Reply

      Hi Sam,

      As far as the finance agreement is concerned, FCA rules are clear, you should have fair time to be able to consider if the financial agreement is right for you. If you have decided that it is not, then they should not try and force you to enter it as this would be non-compliant. Therefore, technically you would not be able to continue with the purchase of the vehicle as you wouldn’t have the funds to do so. The dealership would find it difficult to charge you for cancelling the vehicle on this basis as it is a basic requirement; the customer should not be forced into an agreement which they don’t feel comfortable with.

      If you have any further questions, we recommend you seek independent legal advice from an agency such as the Citizen’s Advice Bureau.

  • Olgadelia32@gmail.com| 7th August 2019 at 7:00 am Reply

    Hello I just bought a 2019 car this weekend I have only 4 days with the car is there any advise. I dont want to keep the car not able to pay off I have medical issues

    • Rachel Richardson| 7th August 2019 at 9:35 am Reply

      Hi Olgadelia,

      Thank you for your comment. Unfortunately we are unable to offer you any advice that is relevant to the US market. We would recommend that you contact an independent legal advisor who will be able to help you. We wish you the best of luck with resolving the issue.

  • Paula| 6th August 2019 at 10:59 am Reply

    I have recently taken delivery of a new vehicle but the trim was not what I ordered so I was reluctant to sign for the car. Upon speaking to the dealer I was offered compensation for this as to change the trim to the spec I ordered would have taken quite some time. So I agreed to accept the compensation and keep the car. However, despite chasing twice now, I still have not received any compensation. I have had the vehicle for 11 days. Could I still cancel the contract? Thanks

    • Rachel Richardson| 6th August 2019 at 11:29 am Reply

      Hi Paula,
      We are unable to offer any legal advice. However, you agreed to accept the vehicle based on receiving compensation and it will depend on whether within that agreement both parties confirmed how long it would take to receive whatever compensation was agreed. If you bought it from a dealership we would suggest that you call them and ask to speak directly to the Dealer Principal who is the person in ultimate control of all departments of a dealership. You may need to be prepared to hold as they are incredibly busy people, but they can get things done.

  • Richard Lamoreaux| 13th July 2019 at 10:26 pm Reply

    I took a lease out 2 months ago on a 2019 Nissan I took out 2 third party mainainence plans for tires and small dents this was added and specified in the lease agreement. I find now I can’t afford these additional policies, I cancelled both. I contacted the dealer and asked about my drop in payments and refunds. They say I still have to pay full lease and Packages even though they are cancelled but will get reimbursed at end of 3 year lease. What nonsense is this to pay for something I don’t have and don’t even get interest on my money. Any advice appreciated. In Michigan here

    • Rachel Richardson| 15th July 2019 at 12:28 pm Reply

      Hi Richard,

      Thank you for your comment. Unfortunately, due to differences between US and UK when it comes to finance rules and regulations this is not something we can answer with any authority. We would recommend you contact an independent legal advisor for guidance.

      We wish you luck and, would appreciate any updates as these would help any of our other US readers should they encounter a similar situation.

  • Bruce| 7th June 2019 at 6:08 pm Reply

    Hi, i have recently signed an online agreement for personal lease hire car. 16 days ago to be exact. Car was originally disscussed to be delivered within next 2 week, however agreement has now changed and car still has no build date.
    So could be another 2 months away. I have paid them no money as yet. I have found another broker who can deliver within 14 days and have decided to use them and cancel the other agreement. However the original lease company have now sent me an cancillation invoice for 600 pound. Whats my rights? Thanks in advance.

    • Rachel Richardson| 13th June 2019 at 2:51 pm Reply

      Hi Bruce,
      Thank you for your email. Unless specified on their order form, which you would have signed they cannot charge you. Factory build dates are out of the dealer’s hands, as dates do tend to fluctuate. However, we understand you need your car sooner. We would recommend that you take it to someone for independent legal advice (e.g. Citizen’s Advice).

      We are not legal advisors so are unable to offer you any legal advice specific to your situation.

      • Susie| 22nd August 2019 at 12:49 pm Reply

        Hi I have taken out a lease about a month ago and signed contracts through a ltd company but now circumstances have changed and can’t go ahead delivery isn’t due for another 6 weeks but being told it’s 10% of purchase price to cancel is this right?

        • Rachel Richardson| 22nd August 2019 at 1:30 pm Reply

          Hi Susie,
          Thank you for your question. The only advice we can offer is that you read your finance agreement carefully. All the information you require will be outlined in this. If you are in doubt, we would recommend you contact an independent legal avisory service (such as the Citizen’s Advice Bureau) for information as pertains to your situation.

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