How to Get Out of Car Finance Agreement
How to Get Out of Car Finance Agreement

How to Get Out of Car Finance Agreement Early or Midway the Payment Process

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How to Get Out of Car Finance Agreement – Car buyers have right to cancel several types of agreements regarding to car finance according to the law in United Kingdom, which usually referred as voluntary termination.


It is stated in Consumer Credit Act, Section 99 under PCP or HP agreements.

Here’s how to get out of car finance agreement for both buyers of used and new cars.


How to Get Out of Car Finance Agreement
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How to Get Out of Car Finance Agreement with PCP and HP

Section 99 of Consumer Credit Act is designed to protect people who for some reasons are not able to afford monthly repayments anymore.


PCP and HP agreements are a bit different in procedure,

so here are how you can claim the agreement cancellation.


  1. Personal Contract Purchase (PCP)


  • As long as the buyer has paid minimum 50% of the total finance to the company, then they can perform voluntarily termination according to PCP agreement. The total finance should include all the fees and interests that must be paid.


  • The total finance should include balloon payment as well. It’s an important component because there’s a good chance the car buyer won’t get their 50% back midway through the repayment process as they are scheduled to.


  • Besides the regulation of minimum 50% of the total finance, the car should be ensured that it’s still under good condition, which means there is no major damage aside from typical wear and tear. As the car buyer, you may refer to the fair guide of wear and tear from the finance company if you want to check what’s considered as acceptable and what’s not. It’s a good idea to take photographs of car with the date in order to protect yourself against possible charges over damage when the car is returned.


  1. Hire Purchase (HP) – How to Get Out of Car Finance Agreement


  • HP agreement require the car buyer to pay at least 10% of the total cost as initial deposit, which followed by repayments each month as scheduled.


  • Similar to the process of terminating PCP agreement, it’s also possible to end HP agreement early and have paid at least 50% of the total finance. However, this agreement doesn’t require you to include balloon payment, so naturally you will reach the 50% mark of repayment on halfway the repayment schedule.


  • Also similar to PCP agreements, car buyer is allowed to repay the remaining of 50% repayment if they haven’t reached the amount to make up for it. The regulation about car’s condition and damage is also applied to this particular agreement.


There are plenty of different reasons why a car buyer wants to terminate their car finance agreement.


One of the most common reasons being a change in their financial circumstances,

which may affect their ability to keep up with the commitment of regular monthly payment.


Another common reason is because they don’t use the car as much as they thought to be.


Read more:

  1. How Much Does a Smart Car Weigh and Why Is It Crucial
  2. How to Remove Tree Sap from Car In 5 Easy Steps & Safe
  3. How to Transfer a Car Title to a Family Member with Ease


Whichever may become your reason to terminate the agreement,

you may use the guide on how to get out of car finance agreement above.


Keep in mind that different plans have different rules that applied to the contract of purchases.

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