Can You Get Out Of A Car Lease Early
Short answer – Yes, but we wouldn’t advise it.
What is an early termination?
An early termination is when you can no longer fulfil the obligations of the car leasing contract and wish to terminate early.
“Early termination will be subject to fees”
The most ambiguous sentence in the world right?
Depending on the leasing provider and the finance company they use, you will likely incur at least 50% of the outstanding monthly rentals.
Why do I need to pay 50% of the rentals?
It’s pure risk. Nothing personal.
The leasing company has bought a depreciating asset for you to lease over a particular period. They do their due diligence with a credit check to see if you are eligible for credit – Remember, car leasing is a type of finance.
If you cancel the contract 6 months into a 36 month lease, the finance company is now obligated to remove that asset from their books, as it is considered a risk. No monthly payments = no revenue = no profit = risk.
In some instances, you may need to pay the lease costs in full.
So what you’re saying is don’t early terminate?
What we’re saying is make sure you are fully aware of the early termination fee. Some companies are more lenient than others but don’t expect to get off lightly.
The early termination fee is designed to keep you in the contract for the full term, otherwise, you would find customers ordering a £40,000 BMW for 6 months and then just handing it back without a slap on the wrist.
Early termination fees are excessive, but they’re designed that way on purpose, unfortunately.
What if I lose my job and I have a company car?
Your company will either re-purpose the car to someone else, hold it on their books for another employee or as a last resort, they’ll early terminate.
Try to predict your short/long term financial future
At the time of writing, it’s currently the middle of June 2020 in the UK and restrictions are currently being relaxed after coronavirus.
Some 600,000+ employees have been let go from businesses, whilst millions are still on furlough. Nobody could envisage the financial disaster this would create around the world, let alone the United Kingdom.
Speak with the leasing company
If you are in financial difficulty, speak with your leasing provider, they may be able to defer your payments for a few months until you get back on your feet.
Alternatively, talk with them about extending your current contract.
Ask if you could change your contract from 24/36 months to 48 months so that you are spreading the cost of the car over a longer period. The payments should be a lot less.
Tip: Ask how early termination fees will be worked out if it is too ambiguous in the contract.
Check out our free car lease comparison tool on the homepage to see if you are receiving a fair deal!