Van leasing is a cost-effective way of financing a new van, however what if you need to cancel the contract before the end of the term? In this blog Leasewell answers one of our most frequently asked questions!
What is early van lease termination and why might it be required?
Early termination of a van lease is when a custom makes the decision to terminate their van leasing agreement before the contracted time is up. The options depend on the type of van leasing agreement that they have chosen. Here is a very brief look at the options.
Contract Hire early termination
If you have a van contract hire agreement, you will be charged cancellation fees for early termination, the size of the fee will depend on the finance company, however most van finance lenders will charge 100% of the remaining monthly rentals if you cancel in the first year of the contract and 50% if you happen to cancel after that.
Finance Lease or Lease Purchase early termination
If you have taken out a finance lease or lease purchase agreement on a new van, you are able to request an early settlement figure before the end of your contract. However, vehicles tend to depreciate more during the first couple of years and settling the contract too early may mean that the settlement figure is higher than what the van is worth at that time.
If you have travelled well under the pre-agreed annual mileage in your finance lease agreement and request an early settlement figure, there is the possibility that the van may be worth more than the settlement figure and you could make a profit in selling the van to a third party.
So depending on your type of contract, it can be a costly option to cancel a van lease early, with these designed not really to be broken. If you do need to cancel your lease for whatever reason, make sure you are fully aware of the costs involved before committing to do so. It is also worth considering at the beginning of the contract exactly how long you will require the van for.
If you are struggling financially and as a result are considering cancelling you van lease, we advise you to contact your van finance provider first. In some cases, they may be able to offer an extension to the length of your van lease (which may make the monthly rentals more affordable but over a longer period), or some other alternative arrangement.
Van leasing deals
Looking for a new van leasing bargain? Hurry over to Leasewell, where we offer a massive range of new vans for sale and low rate van finance options for everyone’s requirements. Simply fill in a contact form or call us on 01656 337337 to get the ball rolling today!