Is It Possible To End A Car Lease Early?

Is It Possible To End A Car Lease Early?

Yes, you can terminate a car lease early. You may think of a car lease as the best option, but now you are stuck with payments. However, the reasons to do the same should be strong. It could be a financial fall, or you no longer need a vehicle.

Cancelling a car lease early implies extra costs. This is especially true if you want to end the deal soon after the agreement. The blog states the capabilities of cancelling a car lease early. It will help you understand whether you should go for it or not.

What does early termination of a car lease sound like?

Terminating the car lease contract implies you are no longer responsible for the payments. You can skip the remaining costs and end the deal. However, you must return the car and pay associated fees and penalties. The termination fee equals the difference between the remaining amount and credit on the vehicle’s current value.

The provider may calculate that for you and provide detailed insight into it. However, the amount depends on the lease conditions and the time of terminating the lease. The sooner you terminate, the more you pay.

Additionally, you must pay the outstanding fees, parking tickets, or other costs accrued on the vehicle.  Thus, the early termination may prove costlier than retaining the vehicle for the complete leasing period.

If you lack financial flexibility to pay the dues, you must borrow. You may encounter different ways to finance the situation. Out of these, consolidating independently is the best solution. It is because skipping payments affects your credit score. Getting a loan quote without a guarantor is challenging. However, individuals with improved financial status and income may get help.

 Check debt consolidation loans for bad credit in the UK with no guarantor requirement. You may consolidate the pending car lease payments and other high-cost debts.

You can do so without bothering the guarantor. It reduces the total amount to pay and the remaining credits to your account. You can use this amount to finance the penalties and other fees to terminate the car lease agreement.

What if you don’t pay on the car lease at all?

The company may repossess the vehicle if you don’t pay the payments. You can pre-empt this by voluntarily surrendering the car.  However, you will still be liable for the payments. You will be liable for less fee in a voluntary arrangement than following a repossession.

According to the rule of thumb-” if you pay less than one-third of the total repayment amount, the company can take back the car.” It will need a court order if the car is in the garage. Alternatively, you can end the car lease by paying over one-third of the car’s cost.

 You can hand over the car and walk away. It is known as the voluntary termination of the car lease agreement. You can do this anytime. The respective company provides you with the total payable amount. Additionally, you would be eligible for a refund if you paid more than half.

What are some ways to move out of the car lease agreement?

You can walk out of the car lease agreement in multiple ways. However, the options you choose depend on the circumstances. Here are some popular ways to move out of the car lease agreement:

1)   Contact your leasing provider

Contact your car lease provider and discuss. Analyse the costs and prospects of cancelling the car lease early. Check whether he can negotiate or provide an alternate agreement. For example, some providers share the facility for the customers to return the car after 30 days of the agreement. However, it may have mileage constraints also. Identify every “ifs” and “buts” before ending the lease.

Moreover, some may negotiate on the termination fee as well. One important thing here is- to be transparent with the provider. Tell the situation as-is.  They may help you stay in contact with the best personalised assistance.

For example, you pay less if he agrees to negotiate the termination cost.  If you need to pay £36000 more on the car with the current value of the car at £60000, you must pay £60000-£36000 = £24000. However, the costs may increase with the penalties and other associated costs. Thus, you may pay more than £24000 on the car cancellation agreement. Get a transparent quote from the provider before deciding.

2) Transfer your lease to another person

On some occasions, you can transfer the car lease to another person. It will depend on the terms of your agreement set out in the agreement. Although, not every provider provides it; it is worth exploring options. It implies, transferring the payment responsibilities and lease terms to another person.

3)  Voluntary surrender or repossession

You can surrender the vehicle to the company. It is like the company repossessing the vehicle if you can’t pay. Under this, you will be liable for some penalties.  It should be the last resort. Try to avoid it at all costs.

4)    Pay over 50% of the contract costs

It is one of the simplest ways to walk out of the agreement. Paying over 50% of the agreement costs and walking out. It does not entail any penalties. However, it may prove a striking challenge for individuals battling strenuous financial challenges.

Will ending my car lease impact my credit score further?

Early termination of the car lease agreement may affect your credit score. Additionally, non-repayment leads to missed payments. This scenario drastically impacts the credit score.  Thus, one must contact the car lease provider before cancelling the lease agreement. He may help you by suggesting tips that may help you with the situation; without impacting your credit score.

For example, he may tell you to pay the minimum you can to avoid credit loss. Check the options to pay or budget for one. He may grant you a timeline after which you must pay the decided amount. If you encounter an emergency in between, don’t affect the budget.

 Instead, seek options to help you with instant payout despite a low credit score. One of those could be getting no guarantor loans at poor credit scores. Some loan providers provide this facility for low scores but better earners. You may finance the emergencies as a regular earner. Check the fees and payments associated with the loan term. Sign off the agreement if you can afford the small monthly payments.

How long does it take to terminate the lease?

The time a company takes to terminate a car lease may vary. Every firm has its standards for calculating termination fees and other costs. Moreover, they may differ in documentation requirements. On average, “it takes 3-4 weeks for the car lease termination process to complete.”

Bottom line

So, yes, you can terminate the car lease agreement early. If you can no longer pay, you can end it. However, ending the agreement is costly. It may cost you more than the total payments you make. Contact your car lease provider for a suitable solution. Don’t decide in haste or file for cancellation. Cancelling without paying 50% of the agreement costs is impossible. Know your options well.

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