Terminating Car Finance

nicholsong

Anybody got any advice about terminating a car finance agreement early - are there any rules.

Ideally, I would just like to hand the car back, but don't know if this is possible.

Thanks

Bob63

What type of finance are you talking about?

I terminated an Alliance and Leicester car purchase loan early by calling up and requesting a settlement figure. The price was reasonable so I terminated the loan, sold the car and that was that.

PCP is a very different beast altogether as you have entered into a contract for a certain number of months. The only figures I have ever seen were for terminating company car leases and they were horrendously expensive.

Call the finance company and get a settlement figure. Whatever happens I very much doubt if you can simply hand in the keys and walk away without being hit with some pretty stiff penalties.

EDIT: handing the car back early will almost always result in a high charge because the car depreciates quicker in its first year or two at a higher rate than you are paying off the outstanding finance. In summary whichever type of financing you have there are likely to be losses/penalties.

Mike

Bossyboots

The type of agreement you have is important and with some you can hand the car back after making half the payments and that is the end of it. I will see if I can find the other threads on these boards where this was explained.

xycom1

^^ Yes, with some, once you've paid half, you can just hand back the keys and walk away. This is called a Voluntary Termination (VT) I believe - but the lease company will not thank you for it!

Bob63

xycom1 wrote:

^^ Yes, with some, once you've paid half, you can just hand back the keys and walk away. This is called a Voluntary Termination (VT) I believe - but the lease company will not thank you for it!

Great point. I forgot about that one.

The DTI issued a consultation paper in 2003 with a view to reforming the current law which allows voluntary termination, with no comeback from the finance company to the consumer, of HP agreements (on anything, not just cars) once half the payments have been made. In a wonderful bit of consumer revenge the finance companies make large losses whenever a consumer exercises their right to do this and understandably they want the law changed. IIRC the consultation was canned and nothing more was done because of the general election.

Mike

galileo

Yes once you have paid off half of the amount borrowed under an HP agreement, you can give the car back and walk away.

Normally though in my experience, half of the amount on a pcp HP contract is not paid off until at least after 2 years of owning the car (based on a 3 year term).