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.
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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