Voluntary Termination on lease vehicles

[Lingus]

Hi Lingus here, new member and a confused one too
on what my rights are on my lease Skoda. I’ve read
many replies on what to do with PCP/PCH, HP but
not for lease contracts.
I called Skoda finance today and said I would like to
return car under VT but lady said it is called Early Settlement and carries a fee of 55% of the outstanding
rental. I need clarification on what I can say to them,
my rights as I think they may trying it on.

[R0b]

Hello

A PCH is a lease and vice versa, it's simply a long hire period albeit the name and terminology is different. You have no voluntary termination rights under a pure hire agreement. Assuming you've read my VT Guide (link here), you'll notice that Section 99 says "... the debtor under a regulated hire-purchase or regulated conditional sale agreement shall be entitled to terminate the agreement by giving notice ..."

As you can see, the right to terminate says hire-purchase or conditional sale agreements only - there is no provision for VT on a lease or PCH on the same basis. There is, however, a right to terminate a hire agreement but is subject to certain conditions:-

1. the hire agreement must not terminate less than 18 months.

2. the right to terminate the hire agreement does not apply to agreements where:-
a. the total payments exceed £1,500 per year; and
b. the goods are hired for business purposes.

In relation to lease agreements, hirers tend not to be able to terminate the agreement at the 18 month stage because their rental payments usually exceed the annual £1,500 cap and so the criteria is not met. If your rental payments in a 12 month period are less than £1,500 per year then you could rely on this but the agreement must run for at least 18 months.