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.

608 Comments

  1. Hi stuart,
    i have a car on PCP but it was a trade in for another car which owed money also. so its in negative equity. my financial situation changed when i lost my job and i am struggling to make the payments which are ridiculously high to cover the neg eq! £210 a month for a 6k fiat 500 ! i have had the car 6 months if i was to hand it back ( if this is possible ) do you have to pay the 50% all in one or do you finance the repayments ? thank :)

  2. Hi Stuart, nothing is owed and there have never been any missed payments so on this basis; the point they are making regarding pre-termination liability is invalid right? and has nothing to do with the excess mileage claim? if that is correct, I will eliminate this point and then just focus on the condition in which they shouldn’t have a case as the condition was excellent, regardless to the mileage. Thanks

  3. Stuart Masson

    Hi Alana. If you VT the car, you will be liable to pay the balance of the 50%. You can try and negotiate a debt management plan with the finance company, but they do not have to agree. I’d also suggest reading the information on the forum at http://www.legalbeagles.info for help.

  4. Hi Stuart

    You say pre-termination liability is ‘usually’ used to describe money owed in arrers / overdue payments? Neither of which is applicable in my case. Can you confirm that excess mileage charges can’t be included in this point. This is detailed in the CCA and the if this is a way for them to claw back mileage charges then the whole of this article is false and I’m hoping that’s not the case. Please advise. I am about to go back to them regarding the mileage not being classed as condition but just wondered where I stood as regards to there other point.

    Much appreciated

    Rob

  5. Stuart Masson

    If you are wanting to engage the finance company over legal issues, you will need legal advice or take on any legal liability yourself, as we are not here to offer legal advice. I suggest you read the threads on VT at legalbeagles.info which discuss how to deal with finance companies, or engage the services of a solicitor.

    There is no definitive legal precedent for excess mileage under VT because the finance companies do not want to take these matters to court, as the legal arguments for claiming excess mileage are weak (their contract cannot override statute). The finance company is working on the basis that you will cave in and pay. To successfully defend yourself, you need to be comfortable and competent engaging them on the relevant points of law, which usually means engaging the services of a solicitor.

  6. If you’ve been sent a legal notice then stop seeking free advice and get a lawyer like a normal person. You never intended to honour your contract and now your looking to get out of it without penalty. People like you will get valuable consumer protections overturned thanks to your greed and selfishness.

    Stu i don’t know why you bother replying to jerks like this. Judging by his comments he will screw up his fight with BMW, be forced to pay up and then try to sue you for his losses. Youre too polite to some of these ***holes

  7. I’m 13 months into a contract hire period on a Jag XF. I have no problem with the payments but have had terrible trouble with the cars suspension. It’s had 2 major repairs but is still the same. The dealer and Jag now say the car is fine. It’s not. It’s the worst car I have ever driven in 30 years of driving. The finance company are arranging independent testing with the view to taking jaguar and the dealer to court. Where do I stand in ending this agreement early.

  8. Stuart Masson

    Hi Ray. Your recourse is with the finance company, as it’s their car. Contract hire is a rental, so you don’t have voluntary termination rights, but you do have the right to a properly-functioning car since that’s what you’re paying for.

    For specific advice on how to engage with the finance company, I suggest visiting legalbeagles.info, which has an excellent forum for dealing with consumer legal issues.

  9. Hi there
    I have a Vauxhall insignia and it was recalled due to electric boot issues (ours was fine but we took it in to be done). 2 weeks later the boot failed to open and we’ve been fighting with them to fix it ever since. Apparently there was a leak which blew the circuit board to open the boot. They’ve said it’s not covered under warranty and they say we can’t prove they did anything to cause this. We refuse to pay to have it fixed as we believe they did something and it broke (the same way they did a full service and left the engine cover under the car off and lost a locking nut and tried to charge us for it!!)
    We’ve had enough and would like to get rid of it as we’ve found them shocking.
    We only owe 2 payments and own 50%.
    Are we able to give the finance company the car back with the faulty boot? Or will they make us fix it first?
    Many thanks :)

  10. Stuart Masson

    Hi Katy. I would assume that the finance company would consider it to be damage and insist that it be fixed. A quick check online suggests that several other people have had the same problem, so it is possible that the failure was unrelated to the recall.

    If you are unhappy about the dealer’s level of service, I would suggest contacting Vauxhall HQ and complaining, or you could try another dealership. If you do go to another dealership, they will charge you for the investigation work, and only refund you if it is accepted as a warranty claim.

  11. Hi

    I recently lost my job and ended up taking one on significantly lower pay so am considering a VT on my Audi.

    It’s a 3 year PCP which I’m 1 year and 9 months into, I had some deposit against it, it’s in excellent condition and the mileage is around right for the time I’ve had it (16,500 against 10,000 PA allowance).

    Are there any pitfalls I specifically need to look out for other than the obvious ones on condition? How are Audi finance when it comes to VTs? Flexible, nasty? How does the 50% thin work and being more than half way through am I covered for that?

    Any help or advice would be greatly appreciated.

  12. Stuart Masson

    Hi Brian. The figure you need to know is 50% of the Total Amount Payable, which should be noted in your finance agreement. You then need to work out how much you have paid (deposit plus all monthly payments so far) to see if you have reached this amount. If you have, then you can VT the car with nothing further to pay. If you have paid less than the 50% figure, you will have to pay up to that amount. It is not 50% in terms of time, as the amount also includes the balloon/GMFV amount.

    Condition and mileage are the two biggest sticking points on VTs, so if they give you any grief just stick to your guns. From feedback I’ve received, Volkswagen Financial Services (which is the actual finance company for Audi Finance) are generally pretty good with VTing, assuming you’re not massively outside the mileage allowance.

  13. Thanks for you advice.
    I don’t really want rid on the XF but there is something seriously wrong with the ride. Dealer has proved useless. I keep 100kg of sand in the boot to keep it stable and it only just does the job. It’s been there since it had 3k on the clock. On a £38.5k car jaguar should’ve ashamed of itself. Will persevere with the finance co.

  14. Hi I recently took out a lease Hire purchase on a Mercedes total cost 21249.75 monthly payments of 48*425.59 with an option to pay 5800.00 at the end of 48 weeks
    I recently received the yearly statement telling me I owed the total amount of 26504.56 this is because they have added the option of 5800.00 and not wited until the end of the 48 weeks at the end on to my original hire purchase. this is further confirmed when I looked at rights to terminate which state I can terminate when I have paid half what I owed which is 13252.40.
    Can they add this on to my total credit as I had the option to return the car and not to the balloon payment at the end
    Ray

  15. Stuart Masson

    Hi Ray. Their numbers are correct. The total amount payable is £26,504.56 (which is repaid as 48 x £425 plus £5,800 at the end). Therefore the 50% VT amount is £13,252.40.

    The VT figure or any early settlement includes the balloon amount, because you have borrowed that money. If you get to the end of the 48 months, you can choose to return the car instead of paying off the £5,800 and keeping it. But it still has to be paid one way or another.

  16. I thought it was optional at the end as it says in the contract.
    Ray

  17. Stuart Masson

    Paying them £5,800 in cash is optional, but ultimately you have a debt which needs to be settled. Your options are:
    1) Pay the outstanding £5,800 and keep the car, or;
    2) give them back the car, which they have valued at £5,800.

    From a contractual point of view, either option settles the agreement in full.

    If you want to VT the agreement, you have to factor in half the value of the final payment.

  18. The cash price for the car was 21000 I have the car for 48 months after which I can hand it back or either pay 5800 to keep it.
    at the end of 48 months I will only have paid 20426 (48*425.55) and can hand the car back what happens to the Balloon payment I assume that I don’t pay it as I don’t want to keep the car.

  19. Stuart Masson

    No, if you return the car then the agreement is considered settled. The finance company has calculated that the car will be worth £5,800 at the end of the agreement, so you either pay them the £5,800 or you give them back the car which is worth the same amount of money.

  20. ok Thanks

  21. hi me and my partner passed a car with finance last year, we are ng through a tough time and are having problems making payment. what can we do? my partner just wants to give the car up but we have where near paid half. what would happen if we just stop paying? we would rather they just took the car back

  22. Hi,

    I recently VT’d my car – I was not at 50% of the agreement and was aware of the final payment to make. I have a letter from them saying they would ask for this payment along with any other issues on inspection. There were no issues on inspection – just a little excess mileage.

    This was done on 22/12/15 – it is now 28/01/16. I have had no communication from them? I know the car has been sold at auction (I found it on autotrader). Should I contact them, or do I just hold out

  23. Stuart Masson

    Hi Claire. You don’t have the legal option to walk away from the contract. If you simply try and give the car back, you will be billed for the full outstanding balance (not just the balance to get you to the VT point). Obviously, you won’t be able to afford that so you will default, so it will impact on your credit score and you won’t be able to get finance again.

    You can try to contact the finance company and see if you can work out an alternative payment plan. It may see you paying more in the long term, but reducing your monthly payments in the short term.

  24. Stuart Masson

    Hi Will. I’m sure they will be in touch eventually, but you should keep all your records so that you know exactly how much you owe.

  25. Hi,

    I took out an agreement in September 2014 with £13,250 to pay back at £210 a month. The car was fr my husband, and we have now split leaving me to make the payments. I am wanting to VT but as I haven’t paid much back, is this possible?

    Many thanks!

  26. Stuart Masson

    Hi Liz. You can VT at any time, but you will need to pay off a total of 50% of the Total Amount Payable (presumably £6,625 if your TAP is as described above). This does include any deposit/upfront payment you made when you purchased the car.

  27. Fantastic article! Very informative.I have 6 month’s left on my 4 year PCP and I need to reduce my overheads so was looking to part ex the car.

    Turns out I have minus £2500 equity in the car at Todays trade in value (with the dealer) with £2800 left to pay. I am looking at VT’ing it therefore and purchasing something more reasonable.

    Theres no damage on the car (Alloys are scuffed quite well though) which I know I will be charged for. If I was to see out the term and hand the keys back instead of paying the GFV would they still charge me for damage to the alloys? In other words and I better of cutting my loses and accept the bill for the damaged alloys?

  28. Stuart Masson

    Hi Craig. There is no clear rule on what constitutes ‘fair wear and tear’, which leaves scope for finance companies to charge you for what they perceive as damage at their choice of costs. This will apply regardless of whether you VT the car now or hand it back at the end of the term. Some finance companies are fairly relaxed about scuffs and scratches, while others are more strict.

    However, if the wheels are “scuffed quite well” then you are probably better off having them repaired before returning the car, as it will probably be cheaper than paying whatever the finance company wants to charge you. For a fairly normal wheel design (ie – not a diamond-cut or polished wheel), you are looking at about £50/wheel from a mobile repair man. If you give the car back as is, the finance company may well charge you much more than that.

  29. Hi Stuart – Thanks, just what I was thinking. I think whats stopping me from handing the keys back right now is not knowing what the final bill which I would with a part ex. Worried I won’t end up with enough money for a deposit on a new car or lease (which I might just do this time)

  30. Hi Stuart,

    I’m about to hit the half way point in my agreement (straight HP) when i make my next payment.
    I’m just checking that after 30 months (out of 60) that i am also half way from a £’s perspective, since thats what counts for VT.
    One thing ive noticed is that on the agreement, theyve added the £500 deposit i paid (“Advance Payment” in their lingo) to the “total amount payable”, the figure that has been halved to give the figure they quote on in the T”s&C’s under my right to terminate.
    This goes against one of the comments further up somewhere, but in any case am i right in thinking that if they have included the advance payment in the total, am i right to include it in my paid so far figure? That would make sense, but I want to make sure i’m in the clear before i exercise my right to VT.

    another one… part of their fees is £179 “option to purchase fee” added to the final payment. Should this make up part of the total amount payable for VT (where there is no intention to purchase)? on the basis that, for the avoidance of doubt, all calculations in finance agreements tend to work in the favour of the lender, i assume its just a name for a fee and is still a valid part of the amount payable, even for early termination.

    thanks
    Dan

  31. Hi, I got a car last year second hand through a dealer and now me and my wife are going to be moving to Canada later this year (at the time we didn’t know this and our old car had had it). What would be the best thing for us to do with regards to the car finance.

    Thanks

  32. Stuart Masson

    Hi Tom. You will need to sell the car and settle the finance. Unfortunately, there’s a strong chance that the finance settlement will be more than the car is worth, so you will have to come up with the extra cash to cover the difference. Have a read of our article about settling your finance early.

  33. Great read and thank you for doing it. It’s obviously something that is unfortunately becoming a more real option for people, my self included.

    I am going to start mine with VW tomorrow however am struggling to find the template letter. The link in the article seems to go to different page and was just wondering if you could point me in the right direction please

  34. Stuart Masson

    Hi Mark. Sorry about that, the link has obviously changed over time. I’ve updated it now, or you can just click here.

  35. Hi,
    I have bought a car at the end of nov 2015 for 12000 and have taken a Hire Purchase contract. The total cost of the credit is £13 792. I would like to end the contract (i know it’s soon) but I would like to know how much do I need to pay to the garage if I return it back. We have paid a deposit of 1200 and paid up every month 244 (since dec). Thank you for your help

  36. Stuart Masson

    Hi Rachel. Have a read of our article about ending your finance contract early.

  37. Great article and comments!

    Are you aware of reputable dealers advising customers to do this, possibly even with their own finance group in the middle, in order to make a deal more attractive? Do you know if the Finance Companies in this situation are more likely to condone the action if it means that there is potentially another deal with them to replace it?

  38. Stuart Masson

    Hi Nick. I know that some dealer do indeed advise customers to do this. I’m not sure that the finance company would be especially impressed about it being advertised in such a fashion.

    Finance companies evaluate any application on its merits, which would include previous history. I have heard of companies offering another agreement immediately after a VT, but have also heard of others refusing to finance a customer again.

  39. Once again thank you!

  40. Hi Stuart

    Thank you for the information you have provided in the article. I have recently Voluntary Returned a Mercedes A Class and unfortunately I signed the VT Confirmation letter that Mercedes Finance sent out to me. They have now sent me a bill for £2421 for Excess Mileage and for damage costs. The damage is for a bumper repair that I had done by a Mercedes Benz Official repairer (I travelled a long distance and paid premium costs especially for this) and also had two wheel repairs done, by companies that were chosen by an alloy wheel insurance that was taken out with the Mercedes Finance. I sent Mercedes proof of my wheel insurance and the official repair certificate but they have not acknowledged it.

    Can you please advise me on the best course of action to take against Mercedes?

  41. Stuart Masson

    You will need specific legal advice on how to progress your case against Mercedes-Benz Finance. I recommend visiting legal beagles.info for some tips, but you may need to consider engaging a solicitor to assist you.

  42. Hi Stuart, was hoping you could help me, I have paid more than 50% of my car and now in a position that I want to give it back, but I am 25,000 miles in excess of which it states in my contract that I would have to pay 11p/mile?? Iv calculated this which it comes to just over 2.5k?? I mean my car has been kept in emmaculate condition? Do I need to pay this?? Even if it is in my contract?

  43. Stuart Masson

    Hi Zul. As stated in the above, excess mileage is a hotly debated issue for voluntary termination. Most legal experts agree that you can’t be charged for excess mileage on a voluntary termination, but you can bet that the finance company will come chasing you for that £2,500 regardless. You will probably have a fight on your hands to avoid paying it, but if you are prepared to have that fight then you should win it eventually.

    However, if you are that far over your mileage allowance, it’s probably not an accident and I’m wouldn’t be surprised if the finance company is pretty pissed off with you and prepared to fight you to reclaim at least some of the mileage charge.

  44. Hi Stuart, thanks for the reply, I guess I will have a fight on my hands, does this mean being taken to court? Or will it involve a lot of letter exchanging? Also, do I get an invoice from the finance company for the excess charges or do they invoice me instead? Additionally, if I don’t pay back the excess mileage would this affect my credit score? Finally, once I have given the car back am I within my rights to terminate my direct debit with the finance company via bank straight-away? Or do I have to wait direction from the finance company? Thanks again for your help

  45. Stuart Masson

    In terms of how to deal with any dispute with the finance company, you will need legal advice which we are not in a position to provide. As a start, I would recommend visiting legalbeagles.info, which is an excellent forum for consumer advice. However, if it comes to threats of legal action then you may well need to engage the services of a solicitor.

  46. Thanks Stuart, I have actually registered with legalbeagles and is in fact much more helpful with a lot of people willing to help, thanks again

  47. Stuart Masson

    Yeah, they are generally excellent and are experts in consumer rights & consumer law. Like this site, they are impartial and independent, and purely exist to help people. Even when the law is on your side, it doesn’t mean dealers and finance companies will play nicely, so so it’s good to have assistance to work through your issues.

  48. Hi Stuart!

    Fantastically useful article and incredible that you answer all of the comments. Great work!

    I read in one of the comments, in a situation of negative equity, you could sell the car and make up the negative equity gap with a payment. Would this be selling the car to just anyone for cash and using that plus extra to pay back the FULL amount still owed on the car?

    So, I owe £27,000 total on a PCP. If I could sell the car for £22,000, I would then need to pay the £22k + £5k gap to the finance company, am I correct? Is there anything preventing me from selling a car bought on PCP?

    Secondly, to look at a VT, I would have to pay half of the TOTAL amount owed of the car at purchase assuming you were to buy the car outright at the end of the contract, correct? It doesn’t mean half of the PCP minus the final bulk payment?

  49. Stuart Masson

    “I owe £27,000 total on a PCP. If I could sell the car for £22,000, I would then need to pay the £22k + £5k gap to the finance company, am I correct?”
    Yes, but you should contact the finance company first, as it is still their car. Some have certain rules about how you need to sell the vehicle (eg – the buyer has to pay the finance company direct, rather than paying you and then you paying the finance company).

    For VT, you owe half of the Total Amount Payable, which includes the final payment as it is part of your overall debt. Check out our car finance glossary which explains the terms in more detail.

  50. Considering VT on my BMW but concerned whether it’ll affect BMW allowing me to take out another PCP. I have a new car being picked up on March 1st with PCP arranged through BMW – just wondered if that was safe.

    Alternative is £1.5k negative equity which the dealer will clear, but if I VT I,d get that £1.5k off the price of the new car, so it’s money I don’t want to lose if possible.

  51. Stuart Masson

    Hi Richard. It will be a consideration, but there are plenty of people who claim that they VTed a car with BMW Finance and were able to get another one immediately.

    Also, if you already have a new approval in place, they are highly unlikely to cancel it if you then VT your old car.

  52. Hi Stuart, I posted some comments in early Jan and have since been battling it out with BMW over excess mileage charges. I have stood my ground and refusing to pay the charge based on all my research on your site / legal beagles but they are adamant that I need to pay them. They have started charging interest on the amount owed and now passed it onto collection company and said they will report me to the credit reference agency. Are they within there right to do this when I am still disputing the charge. They keep trying to point me towards the ombudsman if I wish to complain further. Any feedback on this would be much appreciated.

  53. I’ve VT a car with moneybarn after paying 60% and no missed payments. Moneybarn took an additional payment after I notified them in writing of termination on January 22nd. Car was collected on 4th Feb. Moneybarn are refusing to prorata a refund of the payment for Feb. Do I have a right to ask for the refund?

  54. Stuart,
    I currently have a car on PCP that I wish to return early. The car has only had one service at 4,000 miles but is now due an 18,000 mile service. No 12monthly services have been carried out. The car was 14 month old when purchased with 6,000 miles on the clock. I have paid half the finance amount, should I get the vehicle serviced before returning it or will the finance company be looking to penalise me for the missing service history (Nissan juke on Nissan finance)
    Thanks john

  55. Stuart Masson

    Hi David. Yes, you have a right to a refund, but that doesn’t mean that the finance company will make it easy for you. I recommend visiting legalbeagles.info, which provides excellent free and impartial legal advice. You may also need to engage your own solicitor to get what you are owed – and of course, the finance company will hope that you decide it’s all too hard…

  56. Stuart Masson

    Hi John. Yes you should get the car serviced – it is your obligation to take good care of the vehicle while you are the registered keeper, and failing to service the car will be considered “failure to take good care”. If you hand the car back without its servicing up-to-date, you can be sure that the finance company will charge you for a very expensive service, and they will magically find all sorts of work that will need doing at great cost…

  57. Thanks Stuart I thought I had seen a link to termination letter templates on your site but cant find the link could you point me in the right direction. Excellent site with great advise many thanks

  58. Stuart Masson

    It should be in the article above and I think it’s somewhere in the comments as well. Sorry, out and about at the moment so I can’t re-link it until tonight or tomorrow.

  59. I have had a alfa coming up to a year on PCP but the last 3 week it has been in the garage as it has a fault which they are telling me they cant sort out we have had constant problems with the car throughout the year. after being back and forward between alfa and glyn Hopkins the dealer I have now contacted the finance company as I don’t want the car back and want to cancel as I don’t want a faulty car surely. will I be able to claim back the last 12 months of my payments? and my deposit

  60. Stuart Masson

    Hi Adam. It is rare to be able to cancel the finance and successfully claim back previous payments for a vehicle. Have a look at legalbeagles.info, which is a brilliant site for impartial consumer legal advice, but to have any real hope of getting your money back, you would need to hire your own lawyer and take legal action against the finance company.

  61. hi stuart , i have only 3 months left to end my contract , ive just put in a VT, forms have come back , and they are saying unless i sign them i cant end the agreement with them ( mercedes)
    plus are now saying i have a shortfall of 552.01 … but it was sold to me to pay a higher monthly instalment for the mileage of 15,000 per year , so that stands the car in 45,000 miles , however today it is at 35, 000 , obviously 10,000 under , so surely that stands for something …. confused .

  62. Stuart Masson

    Hi Rebecca. You don’t need to fill in any of their forms, as Voluntary Termination is your statutory right and you you only need to give them clear written notice. If you choose to fill in their forms, be aware that you may be signing away some or all of your rights.

    Secondly, you cannot claim a reduction in the VT amount because your mileage is less than expected. The VT amount is 50% of the Total Amount Payable under the agreement you signed, and the figure should be written into your finance contract.

  63. Hi Stuart, I did a voluntary termintaion due to my husband’s employment situation changing.
    I handed the car over and now I keep receiving letters about more payments that need to be made. Are they right to bill me for the car afterwards? The car was in good used condition.

    Thank you
    Nina

  64. Stuart Masson

    Hi Nina. It would depend on what the bills were regarding. If you have not paid 50% of the Total Amount Payable, the finance company is entitled to bill you for the amount required to bring you up to that point. If they are billing you for damages, then you will have to dispute the matter with them if you believe the charges are not reasonable. If they are charging you for excess mileage, then you do not have to pay.
    Whatever the case, you need to pay up if you owe money or reply clearly to reject their charges if you do not feel you owe them anything further. Either way, don’t ignore their letters or you will end up facing ever-increasing charges once they start employing collections agents or lawyers.

  65. Hi Stuart,

    Spoke to Renault Finance today regarding VT, which I am eligable for as just paid over 50% of the finace agreement.. they have said I will owe over £1000 on excess mileage, as for some reason, and I have explained this to them, but all they say is “you have signed the paperwork”.. when I got the car, I made sure to tell the sales person, I do high mileage and yet he put it as 10,000 per annum.. do I have to pay the excess and what can I quote to them if they say I do.. I’ve read something regarding the Consumer Credit Act 1974 but just want to be sure over this as I’m not paying the excess if I don’t legally need to,

    Hopefully you can point me in the right path,

    Many thanks,

    Darren

  66. Stuart Masson

    Hi Darren. As explained above, excess mileage is always disputed by finance companies, but the weight of legal opinion is that they have no basis to claim it. If you read through the various comments on this article, you will find dozens of people in a position similar to you.

    You should be able to get them to drop their excess mileage claims if you hold firm, but they may threaten legal action or call in collections agents if they think you are likely to pay up.

  67. Does anyone know anything about the termination of a contract within the first 14 days? Thanks Jess

  68. Stuart Masson

    Hi Jessica. You can cancel a finance agreement within the first 14 days, but this does not cancel the purchase of the vehicle; it just means you need to find another way to pay for the car. For more information, have a read of our article about changing your mind after buying a car.

  69. Hi Stuart

    After having a read through of previous questions, I fear I may well be flogging a dead horse here, but here goes.

    I have a 2009 A3 on HP and am over the 50% repayment figure but the car has a mechanical fault to such an extent that the bill is expected to be approx. £3,000.

    Coupled with the fact that I now have a company car, I just want rid of the A3 that’s on HP but am in no position to pay £3k on fixing the car.

    The mechanical breakdown is through no fault of my own, it is actually part of a known issue with certain Audi engines of that age that was featured on BBC Watchdog, however mine does not fall into the necessary criteria for Audi to fix FOC.

    Do you see any possible scenario where I get to cut all ties with this nightmare and call it quits? The car would have held its value very well had it not broken down and as it stands at the mo is still worth about £4k. Maybe take the £4k that’s on offer for the car in its current state and hope I can get a settlement figure close to that number rather than look to VT it?

    Cracking thread! Cheers in advance.

  70. Stuart Masson

    Hi Ross. You won’t be able to VT the vehicle if it has a major mechanical fault (well, you can, but the finance company will invoice you for the repair work). You should be able to find your settlement figure very easily by simply calling the finance company and asking them for it, and you can then work out what will be your best (or least-worst) option.

    Have you already approached your Audi dealer about the goodwill fix or are you assuming that it won’t be eligible?

  71. Firstly, this information is very misleading and obviously not 100% correct. By Law, you have the right to exercise your right under the consumer credit act 1974 section 99 and terminate your contract at any time without further reason. You do NOT have to have paid at least 50% of the amount owing or borrowed before termination, and any arrears you built up will be added to your final bill after termination. That is the law. Section 100 of that same act states what you may be liable for under the original terms of the agreement. Nobody who loves their car and has invested money through repairs and keeping it on the road is simply going to hand it back and walk away. People who terminate their contract are 99% of the time in financial difficulty.

  72. Stuart Masson

    Hi Adrian. You are correct that you don’t have to have already paid off 50% before you can initiate a VT of your car. The article states “As long as you repay 50% of the Total Amount Payable, you are entitled to terminate the agreement and return the car to the finance company,” which is correct (note it says ‘repay’, not ‘have already repaid’). Ultimately, you have to pay off 50% before the termination is finalised and you are free of any further payments. In reality, customers are going to be at or near the 50% point before a VT becomes a valid option, as it is not worthwhile early in the agreement (you would usually be better off selling the car and settling any negative equity).
    In respect to your second point, you are fundamentally incorrect. The VT law may have been designed to protect those who are in financial difficulties, but that law has been exploited on a massive scale by those using it to their advantage. Many people VT their cars and walk away instead of running an agreement to its conclusion, especially on a PCP. If you give a car back at the end of a PCP and claim the GMFV, you are basically doing the same thing as a VT, except you have more obligations regarding servicing and mileage. If you scout about on the web, you will find many forums where people boast about VTing every car they own rather than keeping it until the end.
    You can read several earlier comments on this article from people who have blatantly exceeded their PCP mileage agreements and then terminated their agreement to avoid excess mileage charges. By declaring a low mileage and then VTing the car, you can have a lower monthly payment and dodge the mileage charge that would apply at the end of the agreement.
    I have also previously worked for a franchised dealership of a premium Bavarian car manufacturer where the Finance Managers actively encouraged prospective customers to take a 60-month PCP and VT the agreement instead of running full-term on a 36-month PCP with higher monthly payments.

  73. Hi I have VT’d my vehicle. The finance company have come back requesting a further monthly payment that they say I missed even though they accepted the VT as I was over 50%, I’m pretty sure that they have this wrong as although I may have missed the payment I remember paying off the arrears further down the line. They also want a small sum for damage and some mileage excess. Should I reply saying that the agreement is terminated, I have paid 50% and so no further payment towards the finance is payable. I wont be paying the mileage as you suggest but might offer them the small damage fee as a gesture of goodwill to resolve the dispute?

  74. Stuart Masson

    Hi Richard. How you handle the damage charge is up to you – if you agree that there are repairs required, then by all means pay for them. Ultimately it’s all negotiable.

    With regards to how you handle the extra payment they have requested, I suggest you visit the legalbeagles.info forum and ask their legal experts there on how to handle it, as it may depend on how your missed payment was handled at the time. I would have thought that you shouldn’t need to pay this, but you may need to fight your corner a bit to get them to withdraw their claim.

  75. Hello

    I am 11 months away from being 50% paid, I have a fee to pay to cover the last 11 months to allow me to VT. However I received the info pack and its stating that Black Horse will have to record this with credit agencies as a default on my credit score. Surely if I am paying nearly £5,000 to bring the payment up to 50% this won’t be a default but just an VT?

  76. I have a Skoda Fabia on a PCP. Vehicle cash price = £13472.50. Advance payment is £3000 made up of £2500 from P/E and £500 deal contribution. Amount of credit is £10472.40. This is over 41 months. Monthly payment is £110. The VT amount in the contract is £6736.30. If I have worked it out right, does this mean that I have already paid £3000 towards the VT amount, leaving £3736.30 left to pay before I can VT? This would be 35 months to pay. This is just out of interest as I recently bought it and don’t want to but just want to fully understand my options.

  77. Stuart Masson

    Hi Henry. A VT is not a default, as you are executing your legal right to withdraw from the agreement. It will be noted on your credit report, but it will not affect your credit score.

  78. Stuart Masson

    Hi Nathan. You are correct in that your upfront payment (aka deposit) counts towards the VT amount, so you are already £3,000 along the way from the beginning.

  79. Hello
    I got a new clio on 14 plate. I am really happy and would be fine to continue till the end of my agreement however we are looking to move house and the car payments are having a massive impact on how much we can borrow. Do you think I will be able to give the car back this year? It is still like new and I am massively under on my mileage.
    Thank you
    Donna

  80. Stuart Masson

    Hi Donna. Whether you can “give it back this year” will depend on how much you have paid off from the Total Amount Payable. If you haven’t already paid off 50% of the Total, you would need to pay extra to reach that mark and voluntary terminate the vehicle. If you bought the car new in 2014, you are probably not that close to this point yet.

    Your finance contract will tell you what the VT point is, so you will need to work out how much you have paid off so far (initial deposit plus all monthly payments) to find out how far you still have to go.

    Being massively under your mileage allowance doesn’t help you in a VT situation, although it would be useful if you decided to sell the car and pay of the balance outstanding. For more information, read our article on settling a PCP early.

  81. Hi Stuart,

    I am currently 3 years in to a 4 year contract with FleetPrices on a VW Scirocco I hired in March 2013. I no longer wish to keep the car and I am 12000 miles under my Mileage limit. The car is in very good condition and has no excessive damage. Can I terminate my contract as I have paid over 50%? When I called about a termination last year, I was told that I would have to pay off the remainder of my contract to end the agreement and they said I could save some money by lowering the annual mileage, which in the end wasn’t much of a difference anyway. Is there anything I can do without having to pay a ridiculous amount of money to end my agreement?

  82. Stuart Masson

    Hi Hasan. Your termination rights will depend on the type of finance agreement you have with Fleet Prices. My guess is that it is a lease (contract hire), which means you do not have the right to voluntarily terminate the agreement. So you either pay a large sum to end the lease early or you stick with the car for another year.

  83. Hi Stuart, I’m currently 3 months into a PCP deal with Audi and my circumstances have changed and I no longer need the car. Will I be able to return or do I need to wait until I’ve paid half the car?

    Thanks,

    Andrew

  84. Stuart Masson

    Hi Andrew. You can settle the finance agreement now, either by voluntary termination or by selling the car and putting the proceeds towards the finance debt, but either way will cost you a significant amount of money. The agreement does not allow for changed circumstances, and ending a PCP ahead of schedule is not normally optimal. For more information, have a read of our article on settling a PCP early.

  85. Hi Stuart Masson

    I am looking to buy an A3 saloon but my plan is to pay off the balance before the term. I also don’t want to go on HP finance as my monthly repayments will be too much. The audi salesmen suggested that if I aiming to clear the balance befire the term but want to keep my monthly repayments lower until then, PCP plan would be better suited for me. The car is 22k and I am putting a 11k deposit down. So the balloon payment is 12k,,, but as mentioned, I want to pay this off within 6-8 months.

    I guess my question is.. can I make partial payments on regular balance to clear balance asap and will I be charged interest on this…so although my balloon payment is 12k, which is what I will owe at the end of my term, will I be paying more than 12k? also teh audi salesmen has quoted my monthly repayments at £147.14. It it possible to pay off a PCP plan early or is there a fee for this

    many thanks

  86. Stuart Masson

    Hi Raul. Have a read of our article about settling a PCP early, which should answer most of your questions.

  87. I had a new 2015 vauxhall Antara, I pay £280 a month, !2 months old and had a service Unfortunately My job has changed (NHS cuts etc) and I’m now on a lot less a month and need to make some finacial changes. Does the VT 50% take off what has already been payed? and include the final payment.
    This is my second car I have had this way, the last Took in at 3 years old and started again so didn’t have to pay anything.

  88. Hi Stuart. I would prefer to own my car outright at the end of the term and hence I am putting a large deposit down 15k with remaining balance of 7k- car sold to me 22k. My question is that although my monthly repayments will be higher, I am aiming to settle the 7k way before the term ends….with HP finance are you able to pay off the 7k before the term ends? which would essentially mean I also avoid interest payments too. Do HP fiances allow this? thanks

  89. Stuart Masson

    Hi Nick. The VT amount is 50% of the Total Amount Payable, which includes your deposit and all monthly payments (as well as any overpayments you may have made). It does include any final payment or balloon. The exact figure should be listed in your finance contract, and you should be able to work out how much you have already paid. This should give you an idea of how much more you need to pay to be able to VT the car. You can also call the finance company and they should be able to tell you this figure.

  90. Stuart Masson

    Hi Tim. Yes, you can definitely do this. There is usually an admin fee for settling early, but it will be outweighed by the interest saved. For more information, have a read of our article on settling a PCP early. The same principle applies to an HP, but you are in a better position because you don’t have to worry about the balloon payment.

  91. Hi Stuart,

    Last week I took delivery of my new ford car from Dee’s of Croydon and drove it home very happy. Until I noticed the car didn’t have the features I requested. For example power folding mirrors. Full electric Windows, auto beam headlights. I called the dealership and asked them why they said I didn’t add this to the order to which I added I did. He said it’s not on his notes or the order form to which I realised he’s basically calling me a lier and washing his hands off the situation. I spoke to general manager and she said there’s nothing they can do to add those features onto the car and that I don’t have any right to cancel the PCP plan and bring the car back. Please help me I’ve had the car since the 31st March 2016 and I feel I am being penalised for their mistake. And I want out because of this. They are rude and made me feel very uncomfortable with this situation.
    Any advice would help me greatly.
    Many thanks
    Antonio.

  92. Stuart Masson

    Hi Antonio. If the features you are talking about are optional extras, then they should have been listed on the vehicle order form.

    If the extras are not listed on the form, then you don’t really have any grounds to complain as it is your responsibility to make sure that what you are signing is correct.

    If the extras are listed on the order but have not been supplied on the car, then you have every right to return the car and point out that the specifications are not as per the contract (although you should have really checked thoroughly before driving off in the vehicle).

    If you do have cause to demand a refund, have a read of our recent article about how to handle a dispute with a dealership.

  93. Hi Stuart,

    I am 3 years into a 4 year HP agreement and unfortunately I will need to exercise a VT. 50% paid though.

    The car is way below allowed mileage allowed but there are slight damages on the cars interior caused by my me lifting my wheelchair in and out of the vehicle as I am paralysed and can’t walk.

    I’m just wondering if I will be charged for this damage? I know the issue is based on fair wear and tare but in my situation it is just from normal use as a wheelchair user.

    Maybe I’m totally wrong to even think this way? Not to sure! Any help would be most helpful

    Many thanks
    Steve

  94. Stuart Masson

    Hi Steve. Hard to say whether or not you would be billed for damage – it largely depends on who is inspecting the vehicle and what they decide. You may get a bill and be able to argue your way out of it, or they may simply accept is as fair wear and tear.

  95. Hi stuart i took out a PCP On a brand new audi 14 months into it now at £400 a month i feel for that monthly fee i want a higher spec car payments is not the problem. I was told i had to clear my account of 24k and he told me to sell the car but car isnt mine to sell? I asksd audi salesman can i hand car back and look at new model with same payments said not until i clear 24k… can you advise to private sell car and have some negative equity or can i hand it back and walk away

  96. Hi was wondering come October i would of had my pcp agreement for 2 years would be half way through the agreement i dont even do a quarter of the millage that am allowed to do

  97. Stuart Masson

    Hi Alec. You are correct in that the car isn’t yours to sell, but usually the finance company is happy for you to sell as long as they get paid their settlement as part of the sale. Talk to Audi Finance and ask them if they have any requirements for how you go about this. You will have to cover any negative equity between the sale price and the £24K settlement.

  98. Stuart Masson

    Hi Scott. What’s your question?

  99. Hi Stuart, my car is being collected today by a representative of RCI Finance. They say they are going to charge me £100 for doing this (the alternative was to drive it to my nearest drop off in Bristol, which is 70 miles away).

    Is this a charge I should pay? If not, what should i refer to to stand firm that I don’t have to?

  100. Stuart Masson

    Hi Alice. There is no real guidance, so you would need to refer to your contract. You can certainly try standing firm on the grounds that there is (probably) nothing in your contract which allows them to charge a fee for collecting the vehicle.

What are your thoughts? Let us know below.

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