When you make a big purchase, you will often have something called a ‘cooling off period’. This is where you have a certain amount of time to change your mind about your purchase. This doesn’t have to be a purchase, though it is most seen when making a purchase, but can also be a service that you have arranged.
We get asked about cooling off periods from time to time, and the main question we get asked at OSV is ‘do I have a cooling off period before I can receive my vehicle?’. Cooling off period and your rights as a customer can be quite complicated, so we thought it best to write our answer down.
In this article, we explore whether you have a cooling off period, what the cooling off period means and your rights as a customer.
What is a cooling off period?
A cooling off period, in a wider context, is a period of time in which you can cancel an order you have made either online, over the phone or via mail order.
In the context of car leasing, it can be slightly different.
If you are a ‘regulated’ customer, then you will have a 14 day cooling off period. This means that you have 14 days after you sign your order to cancel completely without penalty. Once those 14 days have passed, you cannot cancel without penalty.
You do, however, have the option to change your finance option, but you are still committed to the vehicle.
For example; if you have ordered a car on personal contract hire but you’ve decided you might like to own it at the end, then you can change your finance agreement to personal contract purchase after that 14 day cooling off period at no extra charge to you.
If you are an ‘unregulated’ customer, then you will not have this cooling off period. Your order will stand as it was at the point of order, and you cannot change it.
Am I a regulated customer?
You are a regulated customer if you are;
- A private individual
- A sole trader
- In a partnership with less than 4 partners
This is according to the Financial Conduct Authority (FCA).
You are unregulated if;
- You are a Ltd. Business
- In a partnership with 4 or more partners
If you choose to cancel at any point as an unregulated customer then you will likely incur cancellation charges.
So if you are a regulated customer, then yes you do get a cooling off period. This means that you have 14 days to cancel your order at no extra cost to you. After that 14 days is up, you do not have the chance to cancel without penalty. After that 14 days, you can change your finance agreement, but you still have to remain committed to the vehicle. If you are an unregulated customer, then you do not have this cooling off period. This isn’t a company policy, by the way, it’s FCA regulations.
What happens if I want to change something after the cooling off period?
It depends what you want to change.
If you want to change your finance agreement then you can do so at no extra cost to you, as long as it is before you have taken delivery of the car. That said, you will get a new quotation which could mean that the finance package costs more because the finance options may vary in price. But in terms of additional fees such as administration fees, you should not be charged.
If you want to change the car then this is different. If you change your car before it has been ordered from the dealership then you can do so. In regards to our process here at OSV, this can be done at no extra charge to you as long as you are ordering another vehicle.
What happens if I want to change something after my car has been delivered?
Again, it depends what you want to change.
If you want to change your finance agreement, then whether you can change your agreement depends on the finance house. Be cautious though, the options available to you are very limited, so always check with your vehicle broker to see if this will be an option for you.
If you have a Personal Contract Hire and you love the car so much you want to buy it at the end then this is what you can do;
- Contact the finance house and ask them for a purchase price (not all finance houses will do this but most of them do)
However, it can be complicated, so we would really recommend you contact an experienced broker who will be able to help you through this process.
If you want to change your car, then you will have to cancel your agreement.
Can I cancel my lease agreement?
You can cancel your lease agreement, yes. However, you may incur charges.
How much will it cost to cancel my lease agreement?
It varies in terms of how far into the agreement you are. We can’t tell you how much you will have to pay in cancellation costs, but we can tell you what contributes to cancellation costs, including;
- How easy the car is to re-sell
- How unique the car is
- If the car has a confirmed build slot
- If the car is in stock
- How much your monthly payments will be
- Sometimes the fee is based on monthly payments, so it could be 3 monthly payments
- How far along the line your order is
- If pricing has been secured
How do I cancel my Contract Hire agreement?
If you want to cancel your Contract Hire agreement, then this is what you need to do;
You will speak to the finance house about early termination. There will be an early termination fee. Your terms and conditions will outline the penalties and any cancellation fees. If you accept the fee, then they will pick the car up and you will pay the fee. It’s that simple.
You will still be subject to condition charges, and the car must be in a condition that is in line with the BVRLA Fair Wear and Tear standard. If the car isn’t, then you will incur condition charges. You can read more about Fair Wear and Tear here.
How do I cancel a Personal Contract Purchase?
If you want to cancel a Personal Contract Purchase then it depends how far along your contract you are.
If you have paid 50% of the total amount payable then you can end your contract without charges. However, you will speak to your finance house because fair wear and tear will still apply.
Where can I find my cancellation rights?
You will find your cancellation rights in your terms and conditions of your finance agreement.. It is vital that you read your terms and conditions carefully. They will include your early termination terms and conditions as well as the cause for these actions. This includes;
- Late payments
- Breaching your agreement
- The vehicle being lost or stolen whilst in your possession
If your broker does not talk to you about the cancellation terms before you sign anything, then ask what their cancellation terms are. While you might not think that you will ever need them, you don’t know what’s round the corner and it’s always good to be prepared.
Am I protected if I want to cancel my lease?
You are protected by the FCA and the treating customers fairly principles if you are a regulated customer.
You can also ensure that you are protected before you order your car. This can be done by choosing a vehicle broker that is a member of the BVRLA and are also regulated by the FCA. You can read more about what accreditations you should look for in a vehicle broker here.
One of the best things to do to stop you changing your mind or cancelling your order is to avoid the situation before it happens. This means ensuring that you have done all your research and that you are with a trustworthy broker who can make sure that you are making the right decision for your situation. You can read more about whether leasing is right for you here.
In conclusion, if you are a regulated customer you do have a 14 day cooling off period. This means that you can cancel your order completely. This will be at no extra charge to you. If you are an unregulated customer then you will not have a cooling off period. This is in accordance with FCA regulations. If you want to cancel your lease contract after the cooling off period then you can do so, but it can be complicated and you can incur charges. This is not something we recommend as a viable option, and the best thing to do is to prevent this from being an option in the first place. You can do that by making sure that you choose a trustworthy vehicle broker who gives you all the information you need to make the right decision.
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