Can You Return a Leased Car Early?
To begin with, it’s important to realise that there is no automatic or immediate right that you have in the UK to end your leasing contract. Thus, don’t expect easy car lease cancellation rights. A car lease agreement can also be referred to as personal contract hire. So, you’ll need to be prepared for some outlay during this process if you want to end the payments. It’s worth revising what exactly a car lease is. Essentially, you receive your new car after you’ve paid the initial payment and you then are charged in monthly instalments for a specific period of time. This is all set out and agreed to in a fixed-term agreement.
In other words, you’ve signed a contract. This means you’ve agreed to follow this structure and pay the remaining instalments. If you go to the car company, they may not be happy about ending the agreement. You might be asked to pay all of the remaining instalments in order to settle the agreement and return the car. Of course, this might not be an affordable option for you if you’re in a financially difficult spot. In some cases, the car company may be able to help you out. They could switch you to another lease agreement. This could include a more affordable car. But it’s important to realise that this is not a guaranteed option. This will be only if the car company try to help you with your situation. There is no option for voluntary termination when you have paid half of a finance agreement; this doesn’t become an option for car leases.
Penalties for Early Termination of Car Lease
There are often some penalties that you’ll have to pay if you go ahead with early termination of a car lease. Of course, this includes any remaining payments on the lease. It can also include an early termination fee, which can be outlined in your contract. Car companies can charge you for transportation of the vehicle and any costs incurred for putting it up for sale. It’s important that you look through your leasing agreement and see if you have penalties included in the early termination of a lease. You may find that it’s too costly for you to pay the remaining payments plus any penalties incurred.
Ending a Car Lease Early UK – Your Options
We’ve already discussed your first option; you can return the car to the dealer and you’ll have to pay off the remaining instalments and potential penalties. This can work out an expensive option for you and you’ll need to seriously consider whether you want to go ahead and do this financially. If this isn’t a viable option for you, you can consider purchasing the vehicle and then selling it. There are often provisions in a car lease that mean you can buy the car. You’ll need to ask your car company what the buyout amount will be and see if this is a good option for you. Sometimes, the car market value can be higher than the buyout amount and this can be a better deal for you. You can even ask the car deal whether you can pay off the instalments and buy another car from them. Alternatively, you can offer a lease swap. They may decide to waive any penalties to the registered keeper. But again, this is not an option that is agreed to work. You should always avoid defaulting on your lease. This can cause more problems than it’s worth, such as damaging your credit.