Publication date: 30.12.2025
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A client (UK) planned to enter into a car leasing agreement (PCP / Hire Purchase) with a British finance company to purchase a car worth £18,500.
At first glance, the terms of the agreement seemed standard, but the client sought preliminary legal analysis to avoid financial risks.
Mayko, a lawyer specialising in financial and contract law, conducted a detailed analysis of the car leasing agreement prior to its signing.
The review revealed the following:
- an inflated annual percentage rate (APR) — the actual cost of the loan exceeded the stated amount;
- hidden administrative fees and commissions amounting to over £2,300 for the entire term of the agreement;
- penalties for early termination of the agreement;
- vague terms regarding the technical condition of the car upon return;
- the creditor's unilateral right to change certain terms of the agreement.
Date of legal opinion: 05.05.2025
Result:
Thanks to the legal analysis, the client:
- refused to sign the risky agreement;
- chose an alternative offer from another lender;
- reduced the total overpayment for the car from £7,800 to £3,200;
- avoided potential penalties and additional costs of over £4,500 during the lease term.
What you need to know when signing a car lease or car loan agreement in the United Kingdom ?
- Actual borrowing cost (APR).
The APR shows the total cost of a car loan or lease, including all fees and charges. - Type of contract.
PCP, Hire Purchase and Personal Loan contracts have different legal implications, particularly with regard to ownership of the car. - Penalties and early termination.
Many contracts contain significant penalties for early repayment or termination of the contract. - Car return conditions.
It is important to pay attention to acceptable wear and tear, mileage and technical condition assessment criteria. - Consumer rights.
Understanding your consumer rights under UK law is essential to avoid unexpected liabilities and protect your interests during the lease or loan period.
Financial institutions in the UK are regulated by the FCA (Financial Conduct Authority), which provides additional customer protection mechanisms.
How to avoid financial risks when leasing or financing a car ?
- Do not sign a contract without a full legal analysis.
- Compare not only the monthly payment, but also the total amount of payments.
- Clarify all fees and possible penalties
- Check your right to early repayment
- Analyse who bears the risk of damage or loss of the car
- Additional steps for safe contract conclusion
- Ask for a full financial breakdown of payments
- Check that the contract complies with FCA requirements
- Record all verbal agreements in writing
- Involve a solicitor before signing, not after a dispute arises
Legal analysis of car leasing or auto loan terms in the United Kingdom helps identify hidden costs, reduce overpayments, and avoid financial pitfalls. Timely consultation with a lawyer will help you make an informed decision, protect your interests before signing the agreement, and ensure transparency, legal security of the transaction, and financial stability in the future.
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