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
Latest posts by Andrew Kirkley (see all)

22 Comments

  • Quang| 30th June 2020 at 9:40 am Reply

    I want to ask, I recently entered a lease contract but due to Covid 19, the car delivery was postponed. After their service is back, I booked delivery on 20 June but then car was not showing up and I got message from Broker said that there is warning light on car Dashboard and it has to be returned to dealer to fix it. Today, they told me they need to order the part to fix the car, which makes me feel uncomfortable for that car. Can I require then give me a different one or just reject the car and get out of contract?

    • Rachel Richardson| 30th June 2020 at 10:29 am Reply

      Hi Quang,

      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.

  • Abul ali| 12th May 2020 at 3:43 am Reply

    Hi I have a question regarding a recent delivery of a ford van. I ordered a vehicle and I took delivery and signed on a finance lease agreement only to discover after 2 weeks that an item was missed if the spec list I ordered. I have the finance agreement confirming the spec but the invoice does not have it. Can I still reject the car, it has been over 2 months now due to covid everything is closed. Please can you advise? Thanks

    • Rachel Richardson| 13th May 2020 at 4:20 pm Reply

      Hi Abul,

      Thank you for your question. We would recommend you speak with the dealer you got the vehicle from, they must be given a chance to rectify the issue that you have noticed.

  • 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.

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