What Are My Cancellation Rights When Leasing A Car?

4 minutes Published: 16/03/2021

What's Covered

The prospect of leasing a car makes many drivers nervous. Being stuck in a contract with a vehicle you hate for several years is enough to make anyone queasy. 

“What if I don’t like the car?”

“Or I can no longer afford it?”  

“Can I cancel my lease?”

Unfortunately returning your car isn’t quite as easy as returning that H&M jumper, but you’re not completely stuck.

If you’re quick about changing your mind, you might even be able to cancel your business or personal contract hire deal without penalties. If not, it’s a touch more complex (and expensive). 

If you're wondering whether to buy or lease a car, we’re going to fill you in on your car lease cancellation rights, the costs of ending a car lease early, and let you know what other options you have. 

Can I cancel without penalties? 

Maybe you’ve visited LeaseFetcher and taken out a contract on a ludicrously expensive BMW after a few too many Heinekens. You’ve woken up in a cold sweat knowing you can’t afford it. Calm down. 

In accordance with the UK Consumer Credit Act, you have a statutory right to cancel a lease contract (that you have concluded without face-to-face dealings, i.e on the internet) with no charge within 14 days. 

You also don’t have to give an explanation as to why you’re cancelling and shouldn’t have to pay a cancellation fee to your credit broker.  Your car likely hasn’t left the dealership by this point either, so you shouldn’t have to worry about returning the car. 

If you’ve paid an initial payment (or initial rental), this will be refunded to you.


What’s voluntary termination? 

After 14 days, you’re going to have to pay penalties to cancel your lease contract. This is known as ‘voluntary termination.’ 

You can apply to your leasing company for an early termination at any time. This is where you basically end the lease contract before your contract term is up. This involves paying a set fee (which is at the discretion of your finance provider) and returning the car. 

The termination fee will be detailed on your finance agreement, as it differs from company to company and from lease to lease. 

Typically, you settle the fee in one of two ways: 

  • Pay the remaining monthly payments: This involves paying the rest of the payments you owe until the end of the contract. This isn’t too bad if you’re terminating a lease early to get a new car sooner. Maybe you have 3 months left and just want to pay it off. However, if you’re fairly early into your lease contract, this is going to work out as an astronomical fee.
  • Pay a ‘set’ early termination fee: This is likely to be offered to customers who can’t make their monthly payments. If you’re 6 months into a 36 month lease, you’re more likely to be offered a set early termination fee. Unfortunately there’s no set figure for this - you’ll have to contact your lease company.  Usually though, you might pay something like a 50% charge of all remaining months. Your exact fee will be calculated based on your contract - how long it is, and how many miles you’ve put on the car. There can also be additional charges for admin. 

It’s worth noting, you’ll also need to pay for any damages that don’t come under the BVRLA fair wear and tear guidelines detailed by your leasing company. Also, you might be liable to pay an excess mileage charge if you’ve gone over your allowance. 

car lease cancellation rights

Do I have any other options? 

If you’re cancelling your lease because you’re struggling for money, you should contact your lease company immediately. 

It’s in their interest that you pay your monthly payments - so they’ll make a big effort to help you out. 

You can expect them to offer you something like a longer credit time, so you can reduce your payment for the meantime, but pay for longer. This means that your total amount payable will be considerably higher, but it will get you out of a rut. 

This isn’t an ideal scenario, but if you can’t pay the early termination fee, this might just be your only option. 

Read your contract carefully!

It’s vital to note that the lease company has no legal requirement to offer you an early termination fee (after 14 days). 

You’ll need to carefully read your lease agreement. This will have all the information you need to know if you can’t make your payments, or just want to cancel your lease. 


A lease contract is a legally binding document, and you’re required to pay the monthly repayments unless you come to an arrangement with your lease company. While the vast majority of lease companies will work with you to come to a compromise, keep in mind they don’t have to. 

If you just continue to not make the payments without getting in touch with your credit broker or finance company, your credit score is going to suffer big time  - making it nearly impossible for you to get a new vehicle on a car finance (hire purchase, PCH or a PCP) agreement in the future. 

So make sure you’re in a good financial position before taking out a contract hire agreement and leave your ego at the door - only get a lease-car that you can afford. Don’t take out a Mercedes if you can only afford a Dacia! 

To find a deal you can afford, check out LeaseFetcher for the cheapest lease deals!