ending a car lease/PCP plan early

matty1803

i believe that if you are over halfway through a car lease you can hand the car back. i was told that this could adversely effect your credit rating though as you are technically defaulting on the contract?

has anyone had experience of this, and how badly does it affect your rating?

bclark

No you can't do this for a Car lease.

You can do it for a finance agreement but only after you have paid back over half the amount of money owed. For a PCP this is a lot further than halfway through the term as the total amount repaid include the final payment.

Having said all of that i don't believe that doing this affects your credit rating but I may be wrong.

Quentin

If you hand the car back under the terms of the lease (ie pay the early termination charge), then there would be no adverse effect to your credit rating.

If you fail to pay the early termination charge, then your record will be affected in the same way as it would for any other default.

If they get a CCJ against you, then your rating will be affected as bad as it can be!

matty1803

sorry, maybe i should clarify.

its not a car lease (even though i put that in the title).

its contract purchase. i think thats the right term, there seems to be a lot of names for it (PCP etc).

i put a deposit down, make monthly payments, and at the end of the term i can pay the balloon or walk away. i'm now 2 years into the contract.

the finance company said i could hand the car back now, and they were the ones who mentioned it could affect my credit rating. there is no termination charge.

i dont think CCJs come into it.

Quentin

Check the contract details, early termination will be covered, and there may be a penalty charge for early termination.

If you can't pay that, then it will affect your credit rating, and if the finance company think you can pay what you owe them, then a CCJ could well follow as part of their debt collection procedure.