Car finance: Voluntary termination of a PCP or HP

Car finance advice

One of the most misunderstood aspects of car finance is how you can end your agreement early if you need to.  We have previously explained the ins and outs of settling a PCP early. Today we will look at a consumer right that is built into every regulated personal contract purchase (PCP) and hire purchase (HP) car finance agreement – your right to voluntary termination (VT).

Voluntary termination of a PCP or HP is the legal right of a borrower (you) to cancel your finance agreement early and walk away in certain circumstances. Car finance companies don’t like it, plus it is usually explained poorly (or not at all) by dealers. Luckily for you, The Car Expert is here to help!

Often people’s circumstances can change over the course of a car finance agreement:

  • They can lose their jobs
  • Personal circumstances can change
  • Unforeseen factors might make it difficult to keep up with their monthly car payments

Depending on the circumstances, you may be eligible for voluntary termination of your car finance agreement.

In this article, we will explain what a voluntary termination is, why it exists and how to go about cancelling your agreement by voluntary termination. We’ll also answer a couple of the most common questions about voluntary terminations:

UK law provides you with the right to voluntarily terminate a regulated HP or PCP agreement (Consumer Credit Act 1974, Section 99). Your contract documentation will detail your rights.
Voluntary termination may be an option to prematurely end your PCP or HP car finance agreement

The law is there to protect consumers who can no longer afford their monthly payments. Equally, it provides protection to finance companies to ensure borrowers can’t simply walk away from their obligations at any time.

Voluntary termination clauses in car finance agreements are there to protect consumers. But there’s no doubt that some borrowers will exploit the clause to allow early cancellation of a PCP or HP if the numbers are favourable.

Although voluntary termination provides a safety net for consumers, it generally loses the finance company money. Usually, you haven’t paid off enough to cover your car’s depreciation, so the finance company is taking back a car which is worth less than the outstanding finance amount.

Understandably, finance companies do not like this one bit. But there is nothing they can do to stop it as the law protects termination rights.

There is a lot of confusion about voluntary termination, and that suits the finance companies just fine.

The reality is if you do voluntary termination properly, they can’t stop you. What’s more, voluntary termination will not affect your credit score or credit rating. However, some finance companies may decline any further finance applications from you.

How voluntary termination works

You can end your agreement and return your car to the finance company as long as:

  • You repay 50% of the Total Amount Payable (not the total amount borrowed, as you need to include interest and fees)
  • There are no damages if you have failed to take reasonable care of the goods (over and above normal wear and tear)

Assuming you have complied with both of the above, you’ll have nothing further to pay.

The Total Amount Payable is the total amount borrowed plus interest and fees. It also includes the Guaranteed Future Value (GFV) on a PCP. This means that you usually don’t reach the voluntary termination point until very late in a PCP agreement. For a regular HP agreement, you will usually reach the 50% repayment point about halfway through the agreement.

The Total Amount Payable and termination amount must both be clearly shown on any applicable car finance contract, so you should be able to find it easily enough. You must pay off the termination amount specified to enact a voluntary termination of a PCP or HP.

It makes no difference if you bought your car new or used; the law is exactly the same for both.

Voluntary termination of a PCP or HP: Where do I start?

There are a few problems people run into when trying to exercise termination rights.

Firstly, finance companies and car manufacturers generally dislike voluntary termination and would prefer the clause be removed from the law. You can expect them to show little interest in helping you.

Often, this means they’ll try to drag the process out as long as possible. Also, they may try to make you do a lot of running around. This is because, until you terminate the agreement, they can keep charging you.

Luckily, there are some good resources around like this one from LegalBeagles. It contains a template letter you can send to your finance company.

Be clear in your language and do not get sidetracked by anything unrelated. You don’t have to sign forms or other documentation. Simply send them your letter (email is acceptable, but recorded delivery is better) and stick to your guns. Do not fill out any “Voluntary Termination packs” they send you, even if they insist that you have to. You don’t – it’s a trap to get you to sign away your legal rights.

Secondly, the damage clause is a little vague. It states that there must not be any “damages if you have failed to take reasonable care of the goods (over and above normal wear and tear)”, but there is no definition of what that means, or what constitutes “normal wear and tear”.

As a result, the finance company can and will try to claw back money from you. They will charge you for damage that would not be considered “reasonable care”, and will often use this clause as an excuse to try to pin you for excess mileage.

Usually, this involves threatening letters and large invoices for minor scratches or excess mileage. There will often be various forms and legal jargon to try and scare you into paying up.

LegalBeagles has some excellent advice about documenting your car’s condition with dated photographs to prove it is in “reasonable” condition when you hand it back.

Finance companies cannot charge you for excess mileage (which we will cover in more detail on the next page), although you can be sure they will try.

Thirdly, if you have defaulted on your loan prior to your attempt to terminate the agreement (ie – missed payments), they can potentially refuse to allow it.

If you want to terminate your PCP or HP, plan it in advance. Keep paying your monthly bills until you can exercise your termination rights. The rules are very different if you are terminating the agreement from a position of strength, rather than the finance company cancelling the contract and claiming costs because you have missed payments.

If your financial position is looking wobbly, it is better to be decisive and act early. If your situation collapses and you are no longer able to pay your bills, you may well end up unable to terminate your car finance agreement either. You may have to go down the path of Voluntary Surrender, which is very different to Voluntary Termination and nowhere near as beneficial.

Leases do not have voluntary termination rights

There are many types of car finance, and not all of them are equally protected. If you have a lease (such as a contract hire or operating lease), then you are more limited in your options.

It’s expensive getting out of a lease early, and there is limited support available to help you. You are simply renting the vehicle, with no intention of eventually owning it. As a result, you are not covered by VT rights like you are with a PCP or HP.

If you are a private borrower financing your car from a manufacturer finance company, you’ll generally have a PCP or HP. Therefore you should have voluntary termination rights to end your agreement.

Lease agreements (usually a form of contract hire) are usually preferred by business users. However, a number of finance companies are now promoting personal leasing for private individuals. This is partly due to the absence of voluntary termination rights in a lease.

Make sure you understand what type of finance agreement you are being offered before you sign on the dotted line.

Next page: Will a VT affect my credit rating? Can I be charged for excess mileage?

Stuart Masson
Stuart is the Editor of The Car Expert, which he founded in 2011, and our new sister site The Van Expert. Originally from Australia, Stuart has had a passion for cars and the car industry for over thirty years. He spent a decade in automotive retail, and now works tirelessly to help car buyers by providing independent and impartial advice.


  1. Obviously it’s not something to be taken advantage of – as you point out – but useful information well presented in an even-handed way. Great resource!

  2. I am getting my new car on finance tomorrow and and using my old car as part payment. My old car has recently had battery issues. Will this effect the deal?

  3. stuart

    Hi Chris. It depends on 1) whether the battery problems were there when the dealer originally appraised the vehicle, and 2) whether they notice while checking it over tomorrow. Realistically, the chances are that they won’t look too closely, you’ll sign the car over to them and drive off in your new car, and they will have to sort it out. If they are sending the car to auction, they probably won’t care too much. If they are going to keep it and sell it themselves, they may get a but grumpy, but there’s not much they can do once they have signed for it.

  4. I am vt a car which i have paid more than half of sent a letter off today to terminate agreement , even though they said on the phone i had to get a pack sent out from them and fill it in . Speaking ti them on the phone they said i have to pay nearly 2,000 pounds in excess millage as it states in contract but i thought this only applied if i fullfilled the contract not vt , and how can that superceed cca 100 ? Any help

  5. stuart

    Hi Lizzyanne. As the article states, there is no provision in law for the finance company to charge you for excess mileage when you VT a car. Given that your mileage is significantly over your agreed value (by what, 20K miles?), they’re understandably peeved that your giving back a car that is worth much less than they were expecting. They will certainly try to recover whatever they can from you (and they can get you for damage, for example), but they can’t charge you for excess mileage. Doesn’t mean they won’t try, though.

  6. Hi stuart thanks , Yea it seems they had millage at 5k per year Ive done just above average at about 13 , would this stand up in court though if i vt under cca 1974 where as Long as Ive paid half and taken resonable care it says i should have nothing more to pay i dont see 13k per year as unreasonable . There is dsmage to bumper and i do expect to pay for this but not millage

  7. stuart

    I can’t advise what may or may not stand up in court; you would need to speak to a lawyer and refer to your contract. They would argue that you should take responsibility since you signed a contract based on 5,000 miles per year, but the law does not provide for them to charge for excess mileage. As I see it, they would have to make an argument that the condition of the car is worse than would be expected for fair wear and tear based on 5,000 miles per year.

  8. I will try fight it , even if i get a reduced bill at the end of the day thanks

  9. If I haven’t made 50% in payments yet am I able to do this and pay it off?

  10. Hi , i got a pack from finance co to sign and send back , not doing though already sent à letter stating was doing vt and quoted cca 74 and section 100 sent sd so know they recieved . Thé pack they sentout says requires sig and sent back wants you to sign saying you will pay any excess millage , trying to catch people out .

  11. stuart

    Yes, you should be able to. For example, if you have paid 40% of the total payable, you can pay an additional 10% to bring you up to your 50% and then voluntarily terminate. The only thing that may prevent this is if your agreement does not allow you to pay any additional payments or overpayments, but that would be very unlikely.

  12. stuart

    Yes, stick to your guns and you should be OK.

  13. I’m about to sign a PCP contract for a used car from Evans Halshaw. I asked the salesman to send me an example set of terms and conditions so I can be sure what I am getting myself into. He told me he’s emailed me a contract from another customer and just blocked out all the personal information. He seems to have done this with paper/post-it notes and if I tilt my screen I can clearly see he’s actually covered up all MY personal info!!! I plan to use the halves rule and just end the contract after I’ve paid off the necessary 50%. The contract has me down as doing 6,000 miles a year – I realistically do around 10-12,000. I specifically asked the salesman if having more mileage than this would mean I’d have to pay any excess mileage charges. He assured me that I wouldn’t.
    Now, in the covered up part of the contract, I can see it clearly states that if I “end the contract early (I assume this includes the halves rule), the maximum total mileage (6,000 miles P/A * 48 months agreement) will apply in proportion to the reduced period of hire and your obligation to pay any Excess Mileage Charges will accrue immediately prior to termination. Accordingly, if the vehicle’s mileage exceeds the adjusted Maximum Total Mileage you will have to pay the Excess Mileage Charge for depreciation for each mile covered in excess of the adjusted Maximum Total Mileage”. I think the salesman is trying to pull the wool over my eyes coz he called me to say he’s desperate to rush the sale through. What do you make of it? TIA

  14. stuart

    The salesman is clearly not being entirely honest with you, as you can deduce from the fact that he’s lying about the contract info (incidentally, there’s absolutely nothing wrong with them e-mailing you a copy of the contract you would be signing, as you have the right to take it away to read before signing anyway – so no idea why he bothered to cover it up at all…). The law makes no provision for excess mileage if you are voluntarily terminating as described in the article above, only for damage beyond normal wear & tear. The LegalBeagles links in the article point towards people with plenty of experience in this area, and are well worth a read.

  15. Thanks for the quick response! I know the law makes no provision for it, but it seems to state clearly in the contract I would sign that they will charge me??!?!

  16. stuart

    They will quite probably try, and some finance companies will send official invoices and try to intimidate clients into paying – they are trying to recoup their losses, since you are returning a car worth considerably less than they expected. But they can’t actually make you pay for excess mileage, unless you have damaged the car beyond what would be reasonable wear & tear for the contracted mileage.

  17. Thanks again for the quick response. I don’t like how the salesman has tried to pull the wool over my eyes tbh. Looking at the payment details he has also covered up, he made no mention of the £149 acceptance fee added on to the first payment….it all feels a bit too wishy washy for me. Its a car a really really really want, for a pretty decent price and am reluctant to pass it up :/

  18. If I did decide to back out of this deal, would I be able to get my deposit back? I paid £200 on my credit card plus an additional £105 for them to retain and then move my private plate from my current car (which I planned on part exchanging) and then placing on the new car? I can’t imagine they’d have any grounding to deny me the £105 back, but where do I stand with the £200? TIA

  19. I phoned my fin co today to say id already sent a letter to vt ( copied from this site) and im not signing the vt pack they sent me to sign ( this states i will agree to pay excess millage) she said they needed this and i quoted the cca 74 where you write to people you are making pymt too , she then said she will use my letter as long as im agreeing to their terms of canx which i said i wasnt ( calls recorded) i told Her they cant claim excess millage and that i knew my rights , she continued to say it was in my terms and i signed ( i said this cant superseed government legislation ) she said it does and i will get a bill and they take people to court over it and win ??

  20. stuart

    The £105 is a DVLA fee to put your current number plate on retention. Chances are, this would have been actioned (since it can take up to 4 weeks to go through, moving at the DVLA’s snail-like pace) and therefore you won’t get your money back. But since you will need to do this anyway, you haven’t really lost anything. As for the £200, that’s a matter of negotiation. Clearly they have been deceiving you and you have evidence of this. If they try to be difficult, you can kick up a fuss and you should eventually get it back.

  21. stuart

    If they think that they can supercede legislation then they’re dreaming. I suggest having a look at the info available at LegalBeagles (link in the article above), where they give a lot more explanation on the machinations of these sort of issues.

  22. Thanks again for your reply. I doubt they will have been able to set anything in motion yet as you have to be the registered keeper to apply to put it on retention. As I still own the car with the private plate on there’s nothing they can do until they get the V5 in their name.

  23. stuart

    Depends – did you sign a V317 form for the number plate to be retained? It is perfectly normal for a dealer to arrange this on your behalf, but they would have to have your V5 (plus MOT) and your signature on the form to do so.

  24. I haven’t signed anything at all to do with transferring the plate. All I did was pay for it in anticipation of the transfer

  25. stuart

    In that case you should be able to get the £105 back again.

  26. Well that was pretty easy…called up the salesman to say I’d known the finance contract was in fact my own. He said he wasn’t sure of the data protection implications of emailing out the contract so blanked it out (albeit unsuccessfully). I told him I just wanted to walk away as the contract wording was very dubious and its too much hassle. He agreed to the full £305 refund, took my card details over the phone and that was that :D.

  27. Hi there, I’m coming up to the half way period of my 5 year finance agreement through Santander i believe the type of agreement is HP/Conditional Sale and I am seriously considering using the voluntary termination to end my agreement with them because I am struggling to save any money whilst having to make these payments. What I am worried about is it affecting my credit rating for purchasing a mortgage, my question is do you think i am better off just to continue until the agreement has ended or use the voluntary termination to get out of this agreement so i can properly save for a house.

  28. stuart

    Hi Nathan. I can’t advise what will will work out best for you financially, but a Voluntary Termination is a legislative right and cannot be used to affect your credit rating. It does mean that Santander may be less inclined to offer you a mortgage, as you have failed to complete a previous agreement with you, but it should not affect your chances with other lenders.

  29. Hi again Stuart…just a quick update on the situation. It has been over a week since the salesman promised me a full refund of the deposit and DVLA fee over the phone and lo and behold, my credit card has not been refunded at all. I called up the dealer today to speak to him, but was told he was on holiday and was asked if he (the guy on the phone) could assist me. I explained the situation and he went to speak to the manager and came back quickly with the response “you’re not getting it back”. When I said I should get the £105 back, as this is separate from the deposit for the car, he replied that usually they ask for a £500 deposit, to which I countered that was irrelevant. I recorded the original call with the salesman where he promised the refund and will try and use that as leverage (legally you’re allowed to record a phone call without telling the other person as long as it is for personal use ( Things may get sketchy when it comes to passing that recording on to a 3rd party who wasn’t on the call, but we’ll see. I’m gonna try calling again tomorrow and if no luck, I’ll go straight to the head office.
    I wonder if there is any consumer credit law protecting me as I paid via credit card?

  30. stuart

    I would definitely recommend talking to your credit card company to see if they can assist. There are certainly provisions in the event of technical problems if you have paid with a credit card, but I’m not sure how helpful they will be if you want your deposit back on a car you haven’t bought. And you should certainly go to their Head Office and set out your complaint against their dealership, as they should be able to assist (although it will depend on the exact ownership of the dealership). You can also speak to the finance company to complain that the dealer is mis-selling the finance, which has significant implications for both the finance company and the dealership. Failing all of that, you can complain to the Financial Conduct Authority regarding the dealer’s practices in the selling of finance. Essentially, if you make enough noise they should eventually give you the money back to get rid of you.

  31. I’m stuck paying well over the odds for a car that’s not worth the money I have to pay.
    I’ve paid well over 50% of the total owing with only around 10 payments left.
    I am taking another car out with another finance company paying less a month back for a car much better. At the moment I look to be stuck paying 2 finance agreements. While I can afford but don’t think I should have to especially learning now I could voluntary terminate my contract.
    But I’m nervous n how things like this work out… What will I have to pay if anything ?? Would I be able to spread the cost f I had anything??

  32. We are only 18 months into contract with our car and we have had nothing but bother since we bought they car (paying guts of 2k in repairs up to now and now my clutch is starting to slip and we have been quoted £970 inc vat to repair – could honestly cry. I am calling car finance company on monday to find out about a settlement fee to see if we can trade car in or see if they will consider VT. Do you think they will if we haven’t paid 50% off yet ?

  33. stuart

    Hi Margaret. Sorry to hear that you are having so many problems. Unfortunately the finance company won’t care one iota, which means that they are absolutely not going to allow you to VT the car without paying 50% of the Total Amount Payable (even then, they don’t like it but have no choice but to allow it). Chances are you will also be in a difficult position if you want to part-exchange the car as you will probably have quite a lot of negative equity. I’m guessing you have bought a used car, otherwise these sorts of problems would be covered by the car’s warranty. Without that, you’re unfortunately stuck with it for now or paying a lot to get rid of it.

  34. Due to some unforeseen circumstances I am now having trouble meeting payments for my car, I also feel I am paying over the odds for it. (£300/month for a Fiesta).
    I am looking into the possibility of a VT, but the car needs an MOT and some minor repairs, which I can’t really afford.
    Would this void my chances of a VT ?

  35. stuart

    The car will need to have a valid MOT when you hand it back, and the issue of the repairs will depend on whether it is reasonable wear and tear for the car’s age. If it is more damage than is reasonable, then you will be billed for the damage.

  36. Hi Stuart – Are you familiar Porsche Lease Purchase agreements, they are defined as a type of HP and I want to ensure before committing that VT would be applicable as I am aware that pure lease agreements are exempt from the regulatory rule.

  37. stuart

    Hi Rob. If it’s an HP, then Voluntary Termination rights should included. A Lease Purchase is a form of Hire Purchase so it should be in there. There has to be a clause listed in the finance agreement which explains your VT rights, so you should be able to see it before you sign anything. Have a read of this introduction to car finance which covers different finance products, and our car finance glossary.

  38. If I do a vt with my car when I take it back the v5c will still be in my name how do I get it changed

  39. stuart

    Hi Mark. When you confirm the VT with the finance company, they will have a process regarding the collection/return of the car. That will include inspecting for damage, making sure they have all the keys, books, V5C logbook and any other bits. Their representative will sign the V5C and then you post the yellow section back to the DVLA to confirm that you have handed back the vehicle.

  40. Hi Stuart.
    My car is due it’s 3 year service. Can I still hand it back without it having the service?

  41. stuart

    If the car has not passed the service due date, you should be able to hand it back without servicing it. However, if the service date falls due before you are giving the car back, you should get it serviced. Your finance agreement requires you to have the car serviced on time – if you don’t then you are in breach of your finance contract and they can probably refuse to allow you to VT the car. I don’t know how strict the finance company would be in your instance, but as a rule finance companies don’t like VTs so they will make it as difficult as possible.

  42. Hi Stuart,

    I recently bought a BMW z4 in august, I pay £300 a month on a HP agreement. The agreement is over 4 years. However unexpectedly my financial circumstances have changed and I am now finding it hard to make the monthly payments as well as my general living costs.

    I know that I am in negative equity. But I was wondering what your advice would be?

  43. stuart

    Hi Robert. Best advice is to make your tough decisions sooner rather than later. It probably still won’t be easy, but it usually gets worse the longer you leave it if you can’t make your monthly payments.

    Speak to the finance company and discuss your situation with them. Depending on the type of finance plan you have, they may be open to restructuring it to help out. If you don’t get any support from them to reduce your monthly payments, your best bet is to try and sell the car and take out a (hopefully) small personal loan for the negative equity. It might be a bitter pill to swallow, but it might be your least-worst option.

  44. Hi Stuart, We have two payments remaining to reach the half-way stage on a Personal Loan with Santander and want to voluntarily terminate – can we still do this with a Persoanl Loan ie. it’s not a conditional one? Evans Halshaw sais we should have no problem, but Santander appearing to be playing hard ball. Any advice appreciated as I feel we have been given duff information from EH. Thanks in anticipation.

  45. stuart

    If it’s a personal loan, you do not have Voluntary Termination rights. Check your finance paperwork – if you have VT rights then they will be spelled out clearly in a specific clause. A personal loan is not secured against the vehicle, so the finance company does not have any interest in the car – you simply owe them the money you borrowed + interest and fees. Voluntary termination only applies to secured finance agreements such as a PCP or HP.

  46. I was wondering what the outcome was with the excess mileage invoice after you VT your car ? I am in similar situation as yourself at present – many thanks

  47. Hi Stuart,

    I brought a ford mondeo 3 years ago on a 5 year plan. Meeting monthly repayments is a real struggle. However the car has not been serviced. Would the finance company be able to refuse a VT based on this?


  48. stuart

    Hi Pete. It may depend on whether your finance plan is a PCP or HP. With a PCP, your finance agreement requires you to have the car serviced in accordance with the manufacturer’s service schedule, and usually by an official franchised dealer. Failure to do so is a breach of contract, which means the finance company does not have to let you VT the car. It also invalidates your GMFV at the end of the agreement. If you have a Hire Purchase, you will need to check your contract and see what it says. Any breach of contract means the finance company can refuse a VT, so it will depend on your circumstances. If you have an HP, you may be better off selling the car privately, as you will have paid off a fair chunk and it may be worth more than your outstanding finance amount.

  49. Hi Stuart. My wife bought a car on the 13th of this month via the dealerships HP. We have decided that the repayments are to high and want to pay for the car outright using our savings. The car cost £6,000 and we paid £1,000 deposit plus they allowed us £1,500 part ex on our old car. Can we cancel the HP agreement and pay for the car outright and if we do so will we incur any other costs from the finance company.

  50. stuart

    Hi Pete. If you are quick, you should be able to cancel within the 14-day cooling off period and not incur any fees at all. Have a read here for a bit more info on cancelling your finance within 14 days. If you don’t get it done, you can still cancel but may have to pay some fees. It will still work out to much less than all the interest you would pay over the term of the HP.

  51. To pay off your finance you say you only need to pay 50% of the amount owed is this including the deposit which was put down initially. Sadly lost my job before Christmas and no longer able to afford the finance didn’t realise it was possible to terminate early without paying it all off.

  52. stuart

    Hi Ross, sorry to hear about your situation. Your finance documentation should highlight the exact VT figure, but it should be 50% of the total amount payable (which equals the amount borrowed + interest + fees). It should not include the initial upfront payment as you did not borrow that money.

  53. Hi Stuart,

    Very interesting article and please keep up the good work.

    One thing that I think a lot of people misunderstand about PCP is the fact that the depreciation element of a PCP is a ‘repayment’ loan, whereas the balloon payment is ‘interest only’; thus; the latter element of the PCP never reduces and you pay interest on it at the full amount for the entire term. This is why a PCP is more expensive than HP or a conventional loan where the entire credit balance is repaid on the ‘repayment’ basis.


  54. Hi stuart i wounder if you can help/advice me i took out a lease from kia with 6000 miles a year after 4 months my situation changed im using 10000 miles a year i called kia who said they will not increase my miles i offered to pay more a month i also called santander the finance company both declined now looking into vt it works out cheaper for me to return half way as im going to pay near £1000 excess if i carry on till the end i was then going to look at just buying a car take out a loan now i presume santander will decline me if i take out a loan for a car to purchase outright what am i best doing applying with other companys or for a car loan they shouldnt decline me if my credit score is excellent and can repay monthly payments i sort of feel stuck in what to do as i will need a car.

  55. stuart

    Hi Bash. You don’t have VT rights on a lease like you do on a PCP or HP. A lease is simply a rental, so you are bound by your contract with the leasing company (Santander). There is no simple and cheap way to end a lease, so you are stuck with the terms you signed on for unless you want to pay a huge termination penalty. Taking finance elsewhere will probably not help your situation as you will still have to pay a penalty but will also be paying interest to another finance company.

  56. Hi stuart im sorry it was hp i had not lease it states in my contract i have a right to terminate once ive paid x amount and the car is in good condition please can u readvice me thanks sorry for misinformation

  57. stuart

    Hi Bash. If you have an HP or PCP then it’s surprising that the finance company won’t allow you to amend your mileage. A VT may be a viable option for you, or you could save the extra £1000 over the remainder of the loan so you have it ready to pay the excess. If you VT the car, you will need to pay a deposit on your next car anyway, which will probably be more than £1000. You are right that Santander probably won’t finance your next car, but it shouldn’t stop you getting finance elsewhere.

  58. Hi Stuart,

    Ive read over a few comments here and you seem to know your stuff!!

    I have got a new Mercedes A class, bought in June 2014 from my local dealership. It is a PCP deal and I pay £300/month for it – along with a 30/month service package.

    When doing the deal the guy selling me it did not mention anything about paying money if I wanted to hand the car back early. The impression I got was I could hand the motor back and simply walk away (something he also said) but after reading various comments on here, I am un-sure if I may have to pay something if I wanted to get rid within the next couple months.

    Iam currently saving for a house and doing not bad, but could ideally do with something around the £180-200/month range.

    Basically is it as simple as handing the car back and walking off with nothing? I didn’t have to put a deposit down, they just cleared my finance agreement on my old car. They also serviced it for me so that isn’t due until Sept 2015.

    Any comments would be appreciated. Thanks

  59. stuart

    Hi Arnie. You can only VT your car and walk away once you have reached 50% of your total amount payable. On a PCP this only usually happens a matter of months before the end of the agreement anyway. If you want to change the car at this point, you will have considerable negative equity because the car is worth less than what you still owe. Have a read of this article about settling your PCP early, as it will apply to your situation.

  60. Hi! I’m potentially due to leave the country (for at least a year, outside of EU) in a month or so and I am 2 years into my 3 year Ford Options plan.. what’s the way to get out of this? Ideally I’d obviously like to not be liable to pay thousands before leaving! The Ford was brand new when acquired and has done WAY over the mileage (should have been 18k, currently already done 30k).

    Any advice would be helpful! I’d like to have all the facts before I speak to them.

  61. stuart

    Hi Angel. You are probably at or close to the point where you can VT your car. Check your paperwork on your Ford Options contract, as it should tell you what the amount is (half of the total amount payable). Work out how much you have paid them so far, and that will tell you if you have reached this mark.

  62. hi stuart, I took on a car on finance for £11,000 but after 6 months and payments of £1600 my circumstances changed and i could no longer afford the car, I contacted the finance company who agreed to take the car back they then applied the “half rule” on my account but are now pursuing me £600 for excess mileage and for future payments totalling £6000(original balance due) plus £3000 interest (again on top of the agreement interest in the (£6000 balance due) even though they accepted the car back and applied the half rule to the account? how can they pursue for future payments totalling £9999.08, excess mileage £606.68, have £1600 of my payments plus a car worth at least £6500 when returned – so they are looking to gain £18725.16 from me when the amount borrowed was only £6588 and the total amount due was £11,862.36 – none of it makes sense

    i’ll try and explain it easier

    The original amount borrowed was £6588 the full amount including interest to be repaid back on the agreement was £11,862.36 (it’s on the statement)

    I made payments of £1619.40(statement) and returned the car

    they then made a half rule adjustment on account for £5931.18

    On top of this they are still trying to pursue £6118.12 future repayments? but £6118.12 + £5931.18 + £1619.40 = £13,668.70 this is £1806.34 more than the original agreement amount? This is clearly incorrect

    And what’s even more worrying the “future repayments” amount of £6118.12 already has the interest from the agreement accounted for but for some reason Moneybarn are adding more interest onto the original interest so this “future repayments” total is £9999.08 so they’ve added interest twice to a payment that no longer should exist?

    I’m actually bemused at these calculations all this info is clearly set out on their statement but they are still pursuing me in court in a couple of weeks its crazy

  63. Hi I need a little help, I have been reading some of the above messages about exceeding our mileage. We have just VT our c1 exceeding our limit by roughly 5000 miles, they are trying to bill us £244. The car was in good condition we have charges of £85 for damages which we believe are wear and tear we walked round with the lovely chap who examined our car he said its in pretty good nick for a 34 month old car. We have photos of all around the car but you can’t see any diets or scratches.
    Cheers in advance for your help :D

  64. stuart

    Hi Chris. I don’t know how they have come up with those calculations. If your Total Amount Payable was £11,862.36, then your VT threshold should be £5,931.18. You have already paid £1,619.40, so you should owe £4,311.78.

    They can’t charge you for excess mileage, only for damage. If you have failed to make regular payments or not serviced the car according to its schedule, you lose the right to VT the car. For more information, go to

  65. stuart

    Hi Stephen. It’s perfectly normal for the finance company to ask you to pay excess mileage and damage, and it is perfectly normal to tell them where to go (politely, of course!). They can’t force you to pay for any excess mileage when you VT, and they can only charge you for damage over and beyond normal wear and tear. They are simply trying it on in the hope you will pay, as they are probably losing money by you VTing the car.

    Hold firm and point out that they have no legal basis for their claim under the VT clause. See for more information.

  66. Hi stuart thanks for getting back to me, they are trying to charge for the full amount of the credit then they’ve added £606 for excess mileage then added “future payments on top” then interest on top of it all then theyve deducted £5931.18 for a half rule adjustment?
    I have also checked over the conditional sale agreement and there is nothing on it in relation to the deal, no car info no monthly payments no APR no amount borrowed or amount to be paid back or anything to do with excess mileage, the car had full service history and no damage it was purchased for £7000 I only had it for 6 months so worth at least £6500 – do they need to take into consideration their net proceeds from the sale of the car? it states on their statement that if the vehicle is returned to them they will deduct the net proceeds from the sale of the car from the outstanding balance
    I feel they are trying to get the full amount from the agreement plus mileage costs plus keep the car it’s shocking – their solicitor won’t listen to me when i’m trying to explain this to him or anything else to do with their errors

  67. stuart

    Hi Chris,

    By the sound of it, your agreement may not have a VT clause in it at all, otherwise there would be none of this conclusion. Voluntary termination is only applicable to a PCP or HP finance agreement. There should be a specific clause which indicates your VT amount, which would simplify the whole matter. If you don’t have that clause, you do not have the legal right to give it back and pay half. Sorry.

    And if you bought the car from a dealer for £7,000, then it is almost certainly not worth £6,500 to sell it now. See our article on depreciation, which applies to all cars whether new or used.

  68. Hi Stuart,
    Thanks for getting back to me I took out this agreement in jan 2013 had the car for 6 months handed back to them July 2013 there statement states “on returning the vehicle to us we will deduct the net proceeds from the sale of the vehicle from the outstanding balance”
    I have had the car valued today on glass guide and traders value is £5100
    The “signed agreement” is only 2 pages none of which has any disclosure of the deal i.e APR, amount borrowed, full amount due, payments dates and amounts or mileage or even info on the car make or cost or mileage,
    The agreement has sections on security/insurance of the car
    Missing payments charges – the account was up to date not in arrears
    Ombudsman FCA section
    Right to settle early section
    Right of withdrawal section within 14 days
    Termination section that states – you have the right to end this agreement to do so you should write to the person you make payments to they will then be entitled to the return of the goods and to half the total amount payable under this agreement that is £5931.18 if you have already paid at least this amount plus any overdue instalments and have taken reasonable care of the goods you will not have to pay any more
    Repossession section – your rights if you do not keep to your side of this agreement but you have at least paid one third of the total amount payable under this agreement that is £3954.12 we may not take back the goods against your wishes unless we get a court order. If we do take them without your consent or a court order you have the right to get back your money under this agreement
    The 2nd page is just info stating I confirm to accept the info within this agreement and data protection info
    There is no info regarding the actual agreed terms i.e. payments interest etc and if their statement states they’ll deduct the net proceeds of the sale can I argue that point?

    Thanks again for your advice I really appreciate it

  69. stuart

    If you didn’t specifically declare that you were terminating the agreement as per the termination clause, they don’t have to treat it as a VT. Unfortunately, given that this all happened nearly two years ago, you can’t go back and do it differently. Your best bet is to engage your own solicitor and try to agree a settlement with them, as they have the legal high ground. A solicitor could also advise whether they are breaching the law by not providing all the required information in the contract. If you simply keep trying to argue with them on your own, you are likely to lose and the longer it takes, the more they will be able to claim from you. It could also significantly affect your credit rating.

  70. Hi Stuart id did terminate in writing and they have applied the half rule on the statement – does this help my case?

  71. stuart

    A court will review all documents and correspondence presented over the whole period, and their side is likely to be far more experienced at arguing these cases. Get yourself professional advice; there’s nothing more I can say to assist you.

  72. HI Stuart

    I financed a new A Class in April 2013 on a three year deal at £279 per month with the Agility Finance Package

    It has warned me I am in need of a service at 15,550 miles, I have now done 25,000 miles, however I cant afford the £200+ they have quoted for servicing on top of my monthly train bills to work (unexpected change of job).

    I will be able to get the service done by the time I hand back the car, but it will be a late service compared to what they recommend.

    Will this have a detrimental effect when I hand the car back at the end of lease and will I be liable for any fees?


  73. stuart

    Hi Simon. Yes, having the car serviced on time every time (usually within 1 months or 1,000 miles of the service’s scheduled date, whichever comes first) is a requirement of your Agility PCP agreement. If the car does not have a complete MB service history and you try to claim the GMFV at the end of your three years, they will penalise you by approx. £900 per missed service.

  74. Hi Stuart, Iam also in the similar agility PCP deal for an A class mercedes, monthly payments of £300 per month. I have had the car for 6 months now and possibly looking to hand it back this summer. Do you envisage any costs ? Or is it as easy as handing the car back and walking away to go find a cheaper deal somewhere else (house purchase pushing me to hand it back) thanks

  75. stuart

    Hi Arran. You have to reach 50% of the Total Amount Payable, so unless you have very short-term PCP and a very high deposit, you are going to need to keep the car for a lot longer than another 6 months. The amount you need to pay off should be listed in your contract with Mercedes-Benz Finance. If you want/need to get rid of it early, you will have to pay a fairly large amount to MB Finance.

  76. Hi Stuart,

    I plan on handing back a 2007 mini around April te as that’s when it’s halfway through the hp term. I have owned the car since it had 78k miles and it’s at 108k now. I have had 2 services carried out when the dash said it needed servicing but not by a bmw/mini dealer. Will this affect my right to vt. Also there is some corrosion on the alloys and some stone chips at the front of the car otherwise it’s good for having done 108k and I think the clutch is close to being worn out. Will they come back to me on these points. TIA. Alan

  77. stuart

    Hi Alan. Firstly, halfway through the term does not necessarily equate to half of the Total Amount Payable. Check your agreement details, as it should tell you exactly what you have to pay in total to give the car back (Total Amount Payable includes deposit, interest and fees, so half of that doesn’t necessarily equate to halfway through the term).

    The only stipulation is that you must have taken reasonable car of the car. They can’t ping you for not having it serviced by MINI as long as you have followed the required service schedule. There may be some argument over condition with regard to stone chips and wheel corrosion, but you can decide whether it’s worth getting anything fixed before you give it back.

    Whether the finance company wants to have an argument about charges for vehicle condition often depends on how confident you are in dealing with them. If you make it clear in writing that you are exercising your right to VT the vehicle as per clause X in your contract, and don’t let them sidetrack you regarding any other issues, they will usually accept it and move on. If you start asking them how to go about the process, they will usually give you answers which suit them (ie – telling you that you have to pay for mileage, wear and tear, servicing, etc. which is not true).

  78. ive got a car on pcp with Citroen it finishes in may but they have left me in a hole the settelment fig is just over £5000 my car is only worth £4000 so they say so im arround £1200 down already still got another £800 to pay over the next few months plus the £430 to hand my car back to them at the end of the agreement and i think ive worked out about £600 fo extra milage i was pointed in the direction about phoning up to vt/vr my car i was just wondering would i have a leg to stand on and im hoping to get another pcp but with a diffrent car company would this stop me??? if you could shine any light on this id be gratefull thank you

  79. stuart

    Hi Kyle. Yes, as the above article states, as long as you have repaid more than 50% of the Total Amount Payable, made all your payments on time and had the car serviced according to schedule, you can voluntarily terminate the agreement and give the car back. It is your legal right and will have no negative impact on your credit rating.

  80. andrewtaylor

    Kyle why don’t you try reading the article? And Citroen hasn’t left you in a hole, your the bell end what bought a Citroen.

  81. andrewtaylor

    Heres a tip princess, if you start a contract and try to quit it halfway through to travel the world, don’t complain that your liable for thousands. And don’t get a pcp for WAY lower miles than you actually do then complain about it.

  82. andrewtaylor

    only if its an electric car

  83. Hi I was wondering if anyone as ever heard of a finance company accepting you for finance then putting a clause in where the person apply for the finance is the only person allowed to drive the car and then they wanted prove that no one else was on the policy .

  84. stuart

    I haven’t heard of it personally, but there’s no legal reason why they can’t do so as a condition of financing the vehicle. Does sound a bit unusual though.

  85. Stuart

    I am 3 years into a 4 yr finance deal on my car and have found out that I have negative equity of about £1500. I am in the process of trying to get a new vehicle however I have a dilemma, do i VT the current car or try and get the new dealership/finance company to put this shortfall on the new car finance? Some finance companies won’t do this and will ask me to pay the £1500 before they do a part exchange. I could VT the car but there are a couple of small dents on the vehicle which probably do not come under wear and tear and will need repair, I have done over 2000 excess miles, the car has passed its MOT but the MOT people said the tread on the tyres was just above the legal limit and my tax runs out at the end of March. Time is running out and this could prove quite costly.



  86. Hello there, first of all can I say a massive thank you to you for providing the information on this website. I’ve just VT’d my agreement with Moneybarn which to my suprise they did with no questions asked or any unhelpfulness. The only thing that they did raise which I need to clarify here is that I have done approximately 8000 miles more than in my agreement and they want approximately £800 paying. Obviously this is a large amount of money, do I have to pay it? I am guessing so as its in my agreement. The car that I VT’d is in excellent condition and I have really looked after it so when they come to inspect it they should not find anything wrong. I am going to take detailed pictures of the car inside and out as well as all the invoices and service history so Moneybarn should have no come back. Thanks again!

  87. stuart

    Hi John. You are confusing early settlement with Voluntary Termination. If you are going to VT the car, then assuming you have repaid 50% of the Total Amount Payable, you simply hand it over to the finance company. They can only charge you for any damage that is over and above normal wear and tear. Mileage is irrelevant as long as the car is in good condition. This is your legal right, regardless of the equity position. The negative equity is not your problem, although obviously the finance company will not be happy about inheriting a car that is worth £1500 less than their settlement figure. But that’s their problem.

    Most of what you are describing above is related to settling your PCP early and starting a new agreement. Most finance companies will not allow you to refinance your negative equity (and in reality, you don’t want to do this anyway, as it makes you new car much more expensive and creates even greater negative equity problems during your next agreement), so you would need to settle this with your current finance company before starting a new agreement.

    Usually road tax is the least of your ongoing costs, so don’t get too worried about having to pay your road tax in March. When you sell the car, you will get most of your unused tax back anyway under the new DVLA rules which cam into place last October. Take your time and do it properly rather than rushing, as you are far more likely to get a good result. The tyres may or may not be a big expense, depending on the size & type of tyre. If you are part-exchanging or VTing the car, it doesn’t matter what brand of tyres are on it (unless it’s a performance car like a Porsche), although we would always recommend quality tyres instead of cheapo tyres for safety’s sake.

  88. stuart

    Hi Andrew. If it is a VT rather than an early settlement, then you don’t have to pay anything for excess mileage. Once you point out that you are well aware of your rights under the Consumer Contract Regulations (as linked in the article above) which only makes reference to the vehicle’s condition, they should back down.

    They are basically hoping that you’ll pay it, and I would put money on it that someone would be getting a bonus or commission for any monies reclaimed for the company in this way.

  89. Hi,

    Can you please clarify if the 50% paid is 50% of the original amount borrowed, or 50% of the total amount in a settlement figure obtained now?

    I am 36 months into a 48 months PCP and have been offered a company car therefore wish to return the car.

    So, for example if the original loan (including fees and interest) was £18k, and the settlement figure now is £8k, I can write to them, state that I wish to VT and providing there is no damage I should own no further money?

  90. stuart

    Hi Tom. The figure is 50% of the Total Amount Payable. This should be clearly stated in your PCP agreement. It is neither of the amounts you suggested. Total Amount Payable is everything you have borrowed + interest + fees.

    If you settle early, there is a recalculation of the interest payment (because you will not pay interest on the last year of your agreement if you settle now) so the settlement figure is reduced. This does not apply to a VT situation.

  91. Hi, I took a car out on finance 18months ago and I’m willing to pay the rest of the 50% borrowed. I havnt had my car serviced within the 18 months will this affect the voluntary termination? Thanks

  92. stuart

    Hi John. If you are giving the car back under the VT clause, then there is nothing specific that refers to servicing. However, the finance company can dispute whether the car can be defined as being in good condition if its mechanical maintenance schedule has not been followed (I’m assuming it was due at 12 months but you haven’t done it?). It’s a very grey area – if you have a PCP, they could also potentially argue that you have breached your contract by not having the car serviced on time, and therefore refuse to allow you to VT.

  93. Hi stuart,i have a car taken out on citroen elect 3,the car is due to be returned at the end of may but i wish to return it at the begining of april due to personal circumstances,i phoned up citroen who told me that if i had paid 50% then i could apply,however due to the fact i put a large deposit down my monthly payments were very low at £89,and i only have 2 payments left
    the final balloon payment would have been £4700 so even if i pay the final 2 payments i will still have paid less than the balloon payment £3204 vs £4700 so less than 50%. does this mean that it will be impossible to hand the car back 2 months early (im going out of the country for some time so it will be a massive problem if i cant)

  94. Hi Stuart, Thanks again for answering my question above. I have spoken to my lender (Moneybarn) and basically quoted what you had put in relation to the excess mileage and the response I got from them was “you have signed a legal document which clearly states that you will pay for any excess mileage at the rate of 10p plus VAT over and above 15000 miles per annum.” They then basically said If I refuse to pay this then they will hand the matter onto a collections agency who will come to my house to request the full payment and the guy also said a “black” mark will be placed on my credit file. Additionally, I had a car auction company come to initially inspect my car and they have told me I will be billed anything up to £1000 for “paint work damage to the front of the vehicle”. This is absolute garbage, there are a few stone chips but bear in mind the car has done 85,000 miles, surely stone chips are to be expected? The rest of the car is pristine and has been regularly serviced at main dealers. Could you advise if they are just using bullying tactics here or if i will really have to pay for the stone chips? Note I have taken detailed pictures of my car to be used as evidence if necessary. Additionally, forgot to say, yes this is a VT not an early settlement.

  95. stuart

    Hi Richard. You should be able to voluntarily terminate the vehicle. It’s unlikely that the balloon is going to be more than 50% of the Total Amount Payable. However, even if it is, then it shouldn’t be a problem. You should be able to give the car back in April and make your final two payments to bring you up to the end of the PCP term. The finance company gets the car a couple of months early but you’re still paying what you would owe, so it shouldn’t be a problem.

  96. stuart

    My guess is that it is simply bullying. There’s no provision for their contract to override your statutory rights. The issue of stone chips is always difficult, as small chips can need a full bonnet and/or bumper respray, but the definition of what is acceptable wear & tear is quite grey.

    I suggest having a look at for more information about going about a VT.

  97. Hi I am trying to work out where I am, due to an expanding family I am in need of a bigger car and my 3 door just cant cut it with 2 kids…

    I am almost halfway through the term of my finance (BMW select) and I am trying to work out when I can VT, is it half way through the term of the finance or when 50% of the total amount payable?

    My Payments are spread out over 4 years and I have a balloon payment at the end, do I need to incorporate this into the total amount payable? this would move my VT 2/3s of the way into my contract I think.

    any advice would be appreciated.


  98. stuart

    Hi Billy. The VT point is 50% of the Total Amount Payable (including the balloon), so it is usually fairly late in the term of a PCP. The amount should be clearly stated in your contract, so you can work out how much you have paid since you started and that will give you an idea of how close you are to your VT point.

  99. Hi Stuart,

    I bought a car from CAR TIME show room from Bury, UK, they misrepresent the car information on the advertisement and also during the process of sale sales executive hide the facts. During the sale I particularly asked Sales Executive that car has any damage repair and repainted, he said car is in genuine condition and no repair or repaint be done. But when they hand over the car I get car checked by local garage and they informed me that car has damaged repair and repainted front and back bumper and also side doors. Car Time garage also damage the driver side door while fixing the driver door rattle noise. I have already launched complaint with finance company. Now car time offered me £500 pound to close this complaint. But my concern is they misrepresent the car in advertisement and during the time of sale where they did not disclose damage repair, repaint and any other faults which should be checked at their garage before advertisement. I want to ask what my rights are and where I stand? Your advice will be appreciated..

  100. Hi Stuart,
    I have a PCP agreement with Ford. I have only paid 11 payments of my 68 month contract. My settlement figure is £7183.09.
    I have checked on the like so auto trader and my car is worth around £6800.
    Am i allowed to sell the car and pay the negative equity?

    Thanks for your advice.

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