What Are My Cancellation Rights When Leasing A Car?

5 minutes Published: 06/05/2022

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). 

In this article, 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. 

Or if you're considering rejecting a car you've received because of technical/mechanical faults, read our guide on what your rights are and what to do.

If you're doing your research before taking out a personal car lease or business car lease deal, then stick with Lease Fetcher when you come to deal-hunting! We help you compare car leasing deals from brokers all across the UK.

Can I cancel without penalties? 

Maybe you’ve visited Lease Fetcher 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. It takes a while to lease a car depending on whether you're getting one in stock or something fresh off the assembly line, 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 as you're basically paying the entire cost to lease a car.
  • 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, if you've received the car and used it, you’ll also need to pay lease car return charges for any damages in line with the BVRLA fair wear and tear guidelines detailed by your leasing company. You might also be liable to pay an excess mileage charge if you’ve gone over your allowance. What happens at the end of a lease is the inspector will look over the car and your contract terms, and will penalise you for anything they don't deem up to scratch - cancelling early won't make this go away!

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. Alternatively, you could request a car lease transfer where you transfer the contract to a brand new lessee, meaning you'll have no responsibility for the car anymore.

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 - this makes 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, go on your car lease comparison journey with Lease Fetcher! And to keep your deal even more budget-friendly, follow our car leasing tips and maybe try out some car lease negotiation techniques!