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 had my car on hcp finance for just over 1 year now, I’ve always struggled with keeping up with monthly payments, i have defaulted a few times but have always paid it, I’m now in a position where i really need to terminate the contract as husband will be buying me a car out right to help save monthly costs, is this possible? am i able to terminate it if i explain my financial difficulty? and if so, how do i go about it?
    Thanks
    Ellie

  2. Stuart Masson

    Hi Jamie. What you are wanting is not possible. You would need to settle the outstanding finance and sell the car. You are almost certainly going to have a considerable amount of negative equity, as you will owe more than the car is worth. For more information, have a read of our article about settling your car finance early.

  3. Stuart Masson

    Hi Ellie. No, there is no clause for you to escape your finance agreement due to payment difficulties. You would need to settle the agreement in full and then sell the car. It might be more useful for your husband to put the cash into your current finance agreement rather than buying another car and trying to give this one back.

    For more information, have a read of our article about settling your car finance early.

  4. Hi Stuart,

    I took out a PCP (49 months) in November 2014. I am coming up to two years with the car but I am way over my mileage allowance due to various circumstances, mainly changes to office location. Under the terms of the voluntary termination how relevant is the excess mileage? If I find I have paid over 50% of the agreement over the next few months but my mileage is over the total mileage for the total agreement is this an issue? And would this prevent me from VT?

    If this is an issue can I pay a certain amount now as a lump some in order to reach 50% before I go over the total mileage?

    Your thoughts would be appreciated.

    Thanks,
    Alex

  5. Stuart Masson

    Hi Alex. As our article and replies to other readers explains, there is disagreement over whether excess mileage. Many legal experts have contended that it can’t be enforced, but the finance companies will always try to charge you for it in the hope that you will pay up. It has never properly been tested in court (as far as I am aware), as no finance company has been prepared to take a customer to court for excess mileage.

    Usually, if you are clear in explaining that you know the legislation and your rights in not having to pay excess mileage, the finance company will back off. If we are talking a large number of miles that would cost thousands of pounds in excess mileage charges, the finance company is likely to be much more aggressive in trying to successfully charge you for the money.

  6. Hi, I am more than halfway through a finance agreement with 21 payments left to make. I missed 1 month, that has now been repaid, so am up to date, however mr car is now worth less than half the amount outstanding. It is due a service, which I will have done, and also need new tyres on the front, so getting them done too. I will then look to do a VT, but am a little worried that the finance company ( Motonovo ) may come back and bill me to fix Aircon system. the heater blower has failed. Do I have to fix this or will they try to bill me ?? After paying for service and tyres I really cant afford to fix this as well. Any advice would be greatly appreciated.
    Thank you.

  7. Stuart Masson

    Hi Derek. It will depend on how thoroughly the finance company checks the car before sending it to auction. If they notice the air-con and heater have failed, they will certainly try and bill you for them. As part of the vehicle collection, their agent will complete an inspection form and they will be required to check most of the car’s functions. It will depend on how attentive this inspector is at his job.

  8. Thanks Stuart for your reply. Just have to try and save to fix it first…better to be safe than sorry I guess.

  9. HI Stuart

    I wonder if you could offer me some advise please
    I bought my wife a car for total price £24516.14 with a part exchange allowance of £3800.00
    our circumstances have changed and I had a company car but have chosen to opt out from December this year and take the car allowance, my wife now has a motability car on order
    on the PCP agreement there dosnt appear to be any mention of 1/2 and 1/3rds ?
    I am planning on using the wifes car in the interim until I can VT it
    the car was taken over 42 month 9k miles PCP and we are about 20 months in
    the initial balance to finance was £20616.14 the remaining balance is currently £16542 as of today
    the GFV is £11722.50 ,
    due to using it for work im going to ramp up the millage massively and whilst I realise if I run to the end of the term then I will be liable for a huge excess millage charge probably over £5k as I do 40k per year
    my plan is to start paying an additional £400 a month to get to VT point quicker and then get another car on a 5 year straight HP (I have vted 5 times in the last 15 years but never on a PCP)

    my question is what is the VT figure is it half of the initial cost of the vehicle or is it half the finance figure
    so is it £12758.07 or is it £10308.07

    cheers

    Andy

  10. Stuart Masson

    Hi Andy. The VT figure is half of the Total Amount Payable, which includes balance financed (inc. balloon), deposit, interest and fees. Based on your purchase price, the VT point is probably somewhere around £13-14,000.

    Your finance agreement should clearly state the voluntary termination amount. Failing that, the finance company should be able to tell you if you call them.

  11. Hi Stuart

    After some advice if possible please. I tried to find a similar scenario in the forum to not waste your time, but was unable to find anything.

    I rang mini finance to ask about the process for voluntary termination as I am due to emigrate to Canada next month. I was informed I could hand the vehicle back with no extra payments and would be invoiced separately for any damages incurred to the vehicle and any excess mileage.

    They sent me out a voluntary termination form to sign and when I replied asking if I could just send an email/letter to notify them of my termination, they told me I had to fill out and sign there form to begin the process. Before being informed by someone else and reading up on this website, I initially thought I would have to pay for excess mileage whatever the scenario, so yesterday I went ahead and signed the form and sent it back to speed up the process.

    After someone has informed me today that you don’t have to legally pay excess mileage and looking into it, I am worried that I have no leg to stand on after signing their VTN form. I got in touch with the finance company straight away to try and withdraw from handing my car back, but was informed it is irreversible now that I have emailed them my VTN form.

    In your opinion do you think by signing the VTN form, I now, have no way of getting out of paying the excess mileage? The form has a small section stating “an invoice will be sent to me for any excess mileage charge due in accordance with my maximum contractual mileage, which will be pro-rated to the date I return the vehicle, (Select Agreements only)”. As you have said previously, you do not have to sign the forms they send you and can just send your own letter, which means they have essentially mislead me into signing the form. Would this be a good case to argue paying the excess mileage when they ask me for it?

    Also, are they right in saying I am not allowed to cancel the voluntary termination and keep the car longer? Even though I have not yet sent my MOT cert and VC5.

    I would really appreciate any help of advice you could give me around the situation please, as I emigrate in two weeks and could do without forking out a lot of money for something I legally don’t have to.

    Thank you in advance.

    Alex

  12. Stuart Masson

    Hi Alex. Once you fill in their form, you are essentially agreeing to whatever you have signed. you have also given written notice that you are terminating the contract, so it has effectively ended already. The finance company is under no obligation to allow you to cancel your cancellation simply so you can cancel it again under more favourable terms.

    In terms of your legal position, I would suggest visiting legalbeagles.info for some advice. They have plenty of discussion groups on voluntary termination and the legal processes. However, I think you have probably signed your agreement to pay excess mileage charges.

  13. Kicking myself now. Thanks for your advice, much appreciated.

  14. Hi Stuart, On Monday I took my focus back to ford after 3 years instead of buying it.The car is in perfect condition, no scratches, bumps etc. I thought I would just hand it back and that would be that. They told me I had excess mileage as the contract was 6,000 miles per year.I had it in my head 9,000 as I commute from wirral to Liverpool every day.I had therefore done 26,000 (which as far as I was aware would be fine). It wasn’t until I checked my paper work and my previous opus contract had rent 9,000 and then I got a new car and as far as I was aware, the contract stayed the same,apart from the monthly payments.I would ever had agreed to drop the mileage by 3 000 miles.I am really annowed as Ford didn’t recall my calls. I asked to speak to their business managerelationship (apparently he’s not in until saturday) The manager was off. On my 3rd phone call a stand in manager spoke you me and apparently said there was nothing I could do as I’d signed the contract and that his staff would’ve pointed the mileage out to me. Do I have to pay as I did sign as I didn’t realise I had the paperwork from the previous contract stating 9,000 miles a year.Michelle

  15. Stuart Masson

    Hi Michelle. Yes, you have to pay. You didn’t read the contract before signing it, and now you have been stung by it.

    Even if the business manager at the time was a devious cretin who was knowingly deceiving you, there’s no way you’re going to be able to prove it. He will swear on a stack of bibles that everything was explained to you and you were comfortable with everything before making your decision to sign the contract. Unless you have some kind of written proof that you wanted an annual mileage limit of 9,000 miles, such as written quotes done at the time, there’s not much you can do except rant at them to make yourself feel a bit better.

  16. Hi Stuart,
    Although it’s not what I wanted to hear, thanks for your reply. I feel Fords have been very sneaky.
    Michelle

  17. Hi Stuart,
    I leased a Toyota Corolla 2014 on May 2014.
    I was involved in two accidents (may 2015 & March 2016) Not At-Fault in both accidents. I was in the Hospital for injuries in both accidents.
    My car insurance denied me to renew my insurance and the only insurance available was FAJUA $13,100 per 12 months (Insurance for high risk drivers).
    I already paid 30 months on my Toyota lease. My question is May I return my Toyota Corolla 6 months before lease expire and not affect my credit card report.
    Thanks in advance for your help.
    Juan

  18. Stuart Masson

    Hi Juan. This is a UK site, and I don’t know what the situation is in the USA.

  19. Hiya Stuart, I’ve just set up a new Pcp with BMW, had the car 6 hours and all the warning lights came on. The car is now in for a service and needs a part from Germany. So I won’t have the car back till next week. I haven’t had the car in my possession for longer than 48 hours. Is there any chance I can now say I don’t want the car any more and pull out of the PCP? And terminate the contract?

  20. Stuart Masson

    Hi Jessica. Withdrawing from your PCP does not mean giving the car back; it just means you have to find another way of paying for the car.

    If the car has a significant fault, you can move to reject it under the Consumer Rights Act.

  21. Hi Stuart,

    I have a car on finance, which ive had since July 2016. If I pay half of the settlement figure can I voluntary terminate my car?

  22. Stuart Masson

    Hi Jess. It’s not half of your settlement figure that you need to pay; it’s half of the Total Amount Payable – and that assumes your finance product is one which has a provision for voluntary termination.

  23. Thanks for the reply. Yes the car has a computer fault which they are apparently fixing this week. Because of the fault to the new car, I feel I no longer want that car as it’s not the dream car I imagined having, and feel like there are going to be continuing problems. What would you suggest I do?

  24. Stuart Masson

    In terms of your legal rights, it doesn’t matter whether it was the dream car you imagined having, or whether you feel like there are going to be continuing problems. What matters is the fault at hand and whether it is a significant one. It may something relatively minor and easily fixable, in which case you won’t have the right to reject the car.
    The Consumer Rights Act entitles you to reject a car if it has a significant fault, which is essentially something which is not easily fixable and will keep it from functioning normally. You can probably argue that since the car has been off the road for a week and you have only had it for a few days, it should be considered significant. You will need to contact the finance company in the first instance, as the car belongs to them, not you, so they have to be involved in the rejection process.

  25. Hi Stuart, have read the above comments but doesn’t seem to be an answer to my quick question. I have followed your advice on voluntary terminating my car. The finance company hasn’t sent me out any documents to sign but I am just wondering do I sign anything the collection people give me or will this hold me to having to pay for excess milage?

    Thanks so much
    lisa

  26. Stuart Masson

    Hi Lisa. Legally, you do not need to sign anything. There will be an inspection report, where the person assigned to collect the car will note any damage and confirm that you have handed over spare keys, owners manual, logbook, etc. If you agree with the evaluation of the vehicle’s condition, you can sign this report. However, you should take photos of any damage noted in case you want to dispute the finance company’s charges later on. You should also make sure you get a copy of the inspection report – if they don’t offer you one or don’t have a duplicate available, take a photocopy or at least photograph the report with the camera on your phone.

    The inspection report will note the mileage, but there should be nothing there where you undertake to pay for excess mileage. If there is any other paperwork where you are undertaking to pay for any repairs or penalties, you should probably refuse to sign that.

  27. Great thank you so much. Really helpful site!

  28. Hi Stuart. I’m only just over a year into a 4 year pcp agreement, but have just been laid off & therefore unable to make the payments. How do I stand with regards to not being near 50% & VT??

  29. Stuart Masson

    Hi Chris. There is usually no provision in a PCP agreement for being laid off from work or illness, so you are generally expecting to keep repaying your debt.

    Your best bet is to speak to the finance company ASAP and see if they offer any options to assist – however, they may well not be interested.

  30. Hi Stuart

    Big help! I have sent the VT letter. Now they want me to sign all these forms. How do I get the finance company to hurry up and let me know the date for drop off at the auction house?

    I have already called but they want me to sign the form even though I have told them I will not as I don’t need to.

    Please can you advice? Can I tell them the 14 days notice and that I will charge storage past that date?

  31. Stuart Masson

    Hi Samantha. Once you have sent the VT letter, you have terminated the contract. You do not need to sign any additional forms; however you should pay attention to the inspection report when they come to collect the car, and make sure you agree with everything that is written on it. If you’re happy with everything on it, you can sign it (make sure you get a copy so nothing can be added to it afterwards).

    Finance companies will often try to force you to sign their paperwork, as it is a means for them to try and get you to agree to any fees or conditions contained within. However, you can respond (preferably in writing) that you are fully aware of your rights regarding voluntary termination and you do not have to sign any other forms.

    Yes, you can advise them that if the car is not collected within 14 days, you will start charging for storage. Good luck with actually trying to collect that money, however at least it reinforces that you know your rights.

  32. Hi Stuart,

    Some feedback for everybody.

    We started the process by sending the VT by letter using the template. This was very helpful. The letter was sent recorded and tracked. The same day we called up and paid the outstanding amount. Once the letter was signed for, I emailed them to confirm that they have now received the letter and that we are awaiting their call to arrange the drop off.

    They sent us a bunch of forms back to sign (VT notification and vehicle condition). They also asked us not to stop the direct debit. After a phone call where I stated that I would not be signing anything nothing really happened. During the phone call they insisted they needed the documents back before they could proceed.

    This morning I resent my email stating I had received no reply and once again mentioning the 14 days notice. Within 10 minutes they phoned me and gave me the number to the auction house to arrange the drop off.

    I would like to point out to everybody that you should not be intimidated by their forms AND by the friendly manner they ask you to sign the form. It is a trap for sure!

    We are now going to valet the car, make it look perfect, take lots of pictures and when we drop it off we will film the process and take any pictures of any recorded damage. The car is in fantastic condition but I do not trust the finance company one bit.

    Hope this helps others!

    And Stuart, you are doing a great job here answering the same questions over and over :)

    If they cause any more problems I will let you know.

  33. Stuart Masson

    Hi Samantha. Glad it worked out well for you, just keep on top of the inspection process and make sure you don’t sign anything you don’t agree with – or make any corrections to their report (along with your initials). As a general rule, finance companies will back down far more quickly if they know you are aware of your rights and responsibilities.

    And of course, as you say, don’t trust them one bit!

  34. Hello Stuart

    I took out a 36 month PCP paying £222 per month with a £3200 deposit down. The total amount payable is £18,116.03 so in order to VT I would need to end up paying back £9,058.02 (as stated in the finance agreement). However, with my payments at £222 I would only end up paying a total of £8,023.68 (excluding initial deposit). With this in mind presumably I will have to see out the 36 month contract? Also, once I have paid the 36 months, presumably I can then opt to give the car back, as opposed to paying the optional payment? Although it states in the agreement this must be done 30 days prior to the agreement ending, so how would I go about doing this? It wouldnt be possible to VT before 30 days as I wouldnt clear the 50% figure during the 36months.

    Thanks

  35. Stuart Masson

    Hi Jordan. Your Total Amount Payable (and therefore your VT point) includes your deposit and the GMFV/balloon amount at the end. As your deposit was £3,200, you should hit your VT point after about 26-27 months by my very quick calculations.

    If you are seeing out the contract and giving back the car, you need to give it back 30 days before the agreement ending because otherwise the finance company will try to take the final payment (GMFV/balloon) as a direct debit, which should be about £6,800ish. If you are like most people, you don’t have that much sitting in your account and therefore it will bounce and cause you to default.

  36. Hi Stuart, we’re just over 2 years into a 4 year agreement with Renault Financial Services, with a balloon payment at the end. I presume that this means we are nowhere near 50% of the value required?

  37. Stuart Masson

    Hi Mark. Probably not. Your agreement should tell you exactly what the VT point is, and you should be work out what you have already paid (including your deposit). That will tell you how close you are.

    If you can afford to pay whatever is needed to get you to the 50% mark, you can hand the car back at any time.

  38. Hi Stuart,
    I have invoked my VT rights 3 days ago with Black Horse and they sent me the forms to fill in an sign. First, Im not signing them because they say I still have to pay a bit over £850 worth of GAP insurance, warranty and cosmetic insurance and I don’t agree with that. They haven’t mentioned anything about the £1600 deposit I paid. I had a good look through your page and you do mention quite few times not to sign the forms, in case we see something that is not quite right. Second, the C200 I bought is only 6 years old but it keeps breaking down every 3 months. ABS failed twice (which is not meant to fail in the lifetime of a car), couldn’t drive the car with less than half of thank of fuel, dashboard failed to show the speed I drove with… I made a complaint to BH and they took two months to fix it, in which time I had no car but still had to make the payments. Got the car back in September and now the engine management light is on, aircon makes a loud noise, has a power stirring wheel leak and a coolant leak. Real joy.. So I called them again and they say they will take 56 days to deal with it, at which point I decided I had enough and I will return the car. At my first complaint BH gave me back £1.4K for the time I did not had the car and it was in the garage. Now.. Im looking to loose about £6K and be left without a car and any refunds. I was wondering..am I entitled to a refund from Black Horse? Seems a bit unfair to pay aprox £7000 just to use a car for about a year and few months (bought it in March 2015 and it has been about 5 months in the garage). The second question is.. if I don’t sign the papers, will the British Auction still accept the return of the vehicle?
    Thank you.

  39. Stuart Masson

    Hi Alecz. To address your questions in order:
    1) Usually GAP, warranty and cosmetic insurance are not covered on your finance agreement, so make sure you haven’t paid for those already.
    2) The £1,600 deposit you paid is not refundable, it is an upfront payment towards the car. It should count towards your VT amount, but you can’t get it back.
    3) No you are unlikely to be entitled to a refund for mechanical failures on a six-year-old car. If you have warranty cover (which you said you do), this is the avenue for pursuing costs.
    4) You don’t need to sign any of their forms to VT the vehicle. All you need to provide is written notice that you are VTing the vehicle. The auction house will know this. You should check their inspection report and, if you agree with it, sign it (and make sure you get a copy). This shows that you agree with the condition of the vehicle as inspected, so any damage that the finance company tries to charge you for that is not listed on the inspection report will not be enforceable. If you don’t agree with the inspection report, amend it (initial your amendments accordingly) and then sign. If they won’t let you amend the report, don’t sign but provide written advice (email or letter) to the finance company that you dispute the inspection report. Take photos of any damage recorded on the report, regardless of whether you agree with the assessment.

  40. Aha.. Thank you, Stuart. That was very helpful!

  41. Hi Stuart,
    I am waiting for collection of my Audi after VT’ing it over the telephone. I have no issues with the car other that the fact that there is no service book- there was never one with the car from brand new- rather it is all stored electronically. It has been serviced in line with the variable service plan it was on- albeit not at an Audi dealership. I have since telephoned Audi to check the car did not come with a service book, which they have indeed confirmed. Will this be ok do you think when British Car Auctions come to collect next week?
    Thanks,
    Arch.

  42. Stuart Masson

    Hi Arch. You should get your Audi dealer to print you out a service record if you haven’t kept your servicing invoices. It shouldn’t be a problem as Audi, like most manufacturers, have moved to digital service records rather than stamps in books.

  43. Hi, I’m approaching 2 and a half years into a 4 year pcp deal(motor balloon?) and will have paid of 50% total amount in the coming months.

    I’m looking to VT the agreement after that but the contract makes no mention of if I’m able to return the car in this way- should this be clearly mentioned in the contract and if it isn’t does it mean VT is not an option.

    Thanks

  44. Stuart Masson

    Hi Matt. If your contract is a PCP (which is a type of Hire Purchase), it should have a section explaining your VT rights and what the VT amount is. If you can’t see that in your contract, contact the finance company to check but you probably don’t have a PCP.

  45. I would like to VT my PCP contract in February when i reach 50% of my contract on my car, however the two front wheels are slightly scuffed I’ve been told, to have them refurbished to new condition, it will cost me £90 per wheel (diamond cut) if i don’t get them done will the finance company charge me for any damages they find? also the two front tyres will need changing do i need to do them too?

  46. Stuart Masson

    Hi Cristian. The finance company will almost certainly try to charge you for any wheel repairs. As for tyres, they can’t charge for new tyres if the existing ones are still legal.

  47. Thank you for your help Stuart and have a great new year.

  48. Hi Stuart, I’m currently half way through my agreement and am now needing to VT, my wife had a crash in the car a few months ago and we got the car fixed and bumper replaced and sprayed at the time, so all is fine with the car now, will we need to inform our finance company that the vehicle has sustained damage? And if so, can they refuse the VT? thanks

  49. Stuart Masson

    Hi David. If the repairs have been done properly, there shouldn’t be any problem. If you have had the repairs done by a body repair shop authorised by the manufacturer, there certainly shouldn’t be a problem. However, if the repaired panel is noticeably a different colour to the rest of the car, or it’s not fitted perfectly, then the finance company will probably take issue with it and try to charge you.
    There’s no definition of what is acceptable; it’s simply a matter of negotiation.

  50. Hi Stuart,

    I recently had to resign from work due to health issues, and as a result I can no longer afford to pay my monthly finance. I haven’t paid 50%, but the car has been well looked after, what are my options?

    I would like to lease a car instead as it is far cheaper and shorter term, but I’m concerned that my credit rating is going to be affected because of having to hand my car back.

    Many thanks,

    Aaron

  51. Hi Stuart

    I have exercised my right to voluntary termination with BMW. They have responded to my letter (taken from legal beagles link you provided) with a letter saying a “termination payment” of £2545.82 is now overdue.

    I haven’t signed anything.

    Do I need to pay this?

    Kind Regards
    David

  52. Stuart Masson

    Hi David. It depends on what the “termination payment” is for. If you haven’t reached the 50% point, it may be the amount you still owe to get there. You will need to speak to the finance company to find out exactly what they are billing you for. If you haven’t handed over the car, it won’t be for damage or excess mileage. There should be no fees to terminate the agreement.

  53. Hi Stuart, I’m currently over half way of my 5 year deal with arnold clarke. I believe more than half has been payed aswell. Looking further into it i have found out i have a “fixed sum loan agreement” with Hitachi personal finance. I’m unsure where i stand with regards to handing it back, is this a possibility? Would it be possible to sell it then pay the rest off?
    Your help would be hugely appreciated.

    Regards Matt

  54. Hi Stuart.
    I terminated my PCP agreement in October as I’d had a baby and the car was too small for us and my maternity pay meant I couldn’t afford the repayments anymore. Anyway this week I have received a letter saying I still owe £223.02 for MultiPart Settlement and this must be paid in 14 days. I’m not quite sure what this amount is actual for. Any ideas? Thanks again.
    Alex

  55. Hello Stuart,
    I called my car finance today to return my finance car. I have been driving it for last 17 months and my situation has changed now as I am leaving the UK. They said, they will send the voluntary termination pack by next week. Meanwhile, they said I may have to pay little less than 4k in order to cancel the finance early. There is no way I can pay this amount and over the phone I told them if that is the case then I will just leave the car on road and go back home as there is probably no intention for me to come back to the UK. Having said that, I also told them because I am good citizen so I dont want any trouble, so I am letting you know in advance that I am leaving and take the car back and release me. Because money wont come out from my throat even though they try to strangle me. They said by next week they will know how much exactly I may have to pay, so I will take it from there. But when they said I got to pay, now I am feeling a bit scared that will they take any legal action against me (by sending police/bailiff or even affect my credit score?). Could you please suggest. Thank you.

  56. Stuart Masson

    Hi Matt. If you have voluntary termination rights, they will be written into the agreement. If you cant see it written there, you probably don’t have a PCP or HP. Contact Hitachi and ask them to confirm that you have paid back more than 50% and can now voluntarily terminate the agreement – they will be quick to correct you if you can’t do it.

    Yes, you can sell the car and pay off the balance owing. For more information, have a read of our article about settling your finance agreement early (it was written for PCPs, but should apply equally to you as well).

  57. Stuart Masson

    Hi Alex. You’ll need to contact the finance company to find out exactly what a ‘multipart settlement’ is. It may just be an attempt to get more money out of you.

  58. Stuart Masson

    Hi Aziz. If you haven’t repaid 50% of the total amount payable, you can’t just give the car back and walk away. If you are only 17 months into your agreement, they are probably correct that you are £4K short of your VT amount.

    If you don’t pay what you owe, they are perfectly entitled to take action against you. And yes, it will affect your credit score. You deciding to leave the UK does not change your legal obligations to repay the money you have borrowed.

  59. Hi, I have recently signed a hire purchase agreement for a car. I was actually thinking of terminating this as I want to go back to my old car. Since I have only had the car for 1 month I would assume that the value of the car would not be very different from when I have purchased it. How much would I need to pay if I wanted to return the car? Would they still ask for half the total amount ?

  60. Stuart Masson

    Hi Denise. Unfortunately it’s not that simple. Your car will have dropped in value significantly – more so if it is a new car, but still a fair chunk if it is a used car. For more information about your car’s value, have a read of our article about depreciation.

    If you are outside the 14-day cooling-off period for your car finance, you will have to repay the full amount borrowed plus some interest and an early termination fee. This means that you will be making a significant loss on the whole thing.

    Finally, there is every chance that the dealer no longer has your old car, unless they have decided to keep it and sell it again. However they are not going to sell it back to you at the same price they bought it from you – obviously they have business expenses and they are there to make a profit.

    Have a read of our article about settling your finance early. It applies to both PCP and HP car finance.

  61. Hi stuart,

    I am wanting to voluntary end my car finance agreement with Advantage. I took the car in january 2015 & have kept up to date with my payments. It is the billing for repairs I am worried about. The car is 2006 and my contract was 4 years. Its not worth another 2 years. Id rather lease.
    It is the billing for repairs and any added costs I am worried about. It is showing signs of age and has done 100000 miles. Can you advise
    Here is a summary??

    Please read the full contents of this email carefully.

    Further to your recent enquiry regarding the voluntary termination of your above numbered agreement, please find below important information outlining the required arrangements.

    Upon termination of the above agreement you will need to pay:

    1. The outstanding arrears on your account (applicable if already paid 50% of the total amount payable) = £0
    2. At least one half of the total amount payable as stated on your Hire Purchase Agreement. This sum takes into account payments you have already paid, any deposit you paid at the start of the agreement and any arrears not shown in (1) above = £0
    3. Any outstanding collection charges = £0

    The total you will need to pay under this section is £0

    If you purchased any insurance products, other than GAP insurance, at the same time as your motor finance and they have not already expired, they will be cancelled upon termination and a pro-rata refund will be applied to your account.

    In the case of GAP insurance the policy will be cancelled upon the termination of the agreement and a pro-rata refund will be applied, which will mean that no further sums will be payable (other than arrears) in respect of the policy.

    Any other outstanding sums (e.g. payments for expired policies and/or any overdue installments) will remain payable under the terms of your insurance agreement.

    In order to settle the insurance element of your agreement and claim any rebate to which you are entitled, you need to pay the amount set out below. This will also ensure that you have no further liability under the insurance element of the contract.

    The amount required to do this is £377.28
    Less Rebate £377.28

    Total amount payable under this section £0

    Condition of Goods

    The goods must be returned in a condition commensurate with their age and mileage, both mechanically and cosmetically. Should the goods not be in this condition when returned you will be required to pay to us the amount required to return the goods to such condition. This amount will be in addition to any sums detailed above (please refer to the terms and conditions of your Hire Purchase Agreement).

    Our definition of good repair and condition is that the vehicle must:

    Require minimal refurbishment to be ready for resale
    Have a current MOT certificate or require little or no work for the issue of a new certificate
    Be free from mechanical or body damage
    Be in its original paintwork, trim and specification (as at the time of purchase)

    If you are in any doubt as to the condition of the vehicle, you may choose to obtain an independant report from an organisation such as the RAC or AA to confirm the above.

    The goods must be returned to us within 21 days of this email to complete the Voluntary Termination.

    In order to obtain details of our nearest agent to you please contact us on 01472 586360.

    Alternatively, we can arrange for the goods to be collected from your address. An upfront fee of £80.00 will be payable for this.

    We look forward to hearing from you.

    Yours sincerely,
    Advantage Finance Ltd.

  62. Stuart Masson

    Hi Nat. Their “definition of good repair and condition” is of no importance, as what matters is what the law says. The law is vague, so anything else is simply negotiation between you and them. To be fair, their definition sounds reasonable and doesn’t specify that the car has to be serviced.

  63. Thankyou Stuart,
    Can I also quiery??
    I require a car for my work & do around 8-9000 miles a year. I prefer diesel however I believe they are now becoming less popular. Taking into account a cars depreciation am I better of re-financing & upgrading to a newer vehicle or leasing??

  64. Hi Stuart,
    Please may I get your advise on my PCP with Peugeot?
    I have had my vehicle for 3 years and another 3 years prior to upgrading my car at the end of my last agreement. Whereas my first vehicle was an ex-demo. My current vehicle was purchased brand new.
    My finance company PSA are due to come and inspect the vehicle in 2 weeks time at my home & I am a little concerned that I am going to get charged a large bill, regarding them trying to charge me additional costs for their version on how the vehicle should be in, their version “Good condition”.
    My vehicle is great condition currently, with £25K on the mileage. The only negative I can see them being funny about are my alloys, as they are very badly scratch and marked. Do you think they will try and charge me for them? (Even though the rest of the vehicle doesn’t have a scratch anywhere) & will they give me the option to get the wheels refurbished myself or not?
    Also just reading through your forum…..my vehicle has been serviced every 12 months, but not by Peugeot. I was never under the impression it “had” to be serviced my the dealership solely. Peugeot have previously rang me each year to remind me of a service but I have always said, I’ll go elsewhere, as I know the dealerships servicing costs are much higher than a normal garage & they have never said it must be serviced by them (I know my first vehicle was never serviced with Peugeot) Could this go against me and could you advise how badly?
    PSA have said the car must be road worthy for them to take the car away (which it is) – However will PSA advise me on whether i’ll be charged before they take the car or after? They have said if they don’t take the car on the day of inspection, i’ll be charged £140.
    Any advised would be greatly appreciated.
    Thanks Lucy

  65. Stuart Masson

    At your annual mileage level, there won’t be any massive financial benefit to choosing a diesel car over a petrol one. So go for whichever you are happiest with. Have a read of our article about petrol vs. diesel – it’s a bit old now and needs updating, but still illustrates the differences well enough.

    Your own individual circumstances will determine which finance path is most suitable; we can only explain how they work, not make recommendations (there are strict FCA rules about offering financial advice). Look through the articles in our car finance section and you will find lots of helpful information to assist you in making the best decision for your situation.

  66. Stuart Masson

    Hi Lucy. Yes, they can charge you for damage to the wheels if it is more than a few minor scratches. If you want to avoid this, you should get them refurbished before the inspection. As for the servicing, it will depend on what your paperwork says. If your contract says that the car must be serviced by a Peugeot dealership (which it probably does), then it’s your problem. If the paperwork does not stipulate this, it’s not your problem and there’s nothing they can do. For more information, have a read of our article about servicing your car if you have a PCP.

  67. Hi Stuart, I have just spoken to Mercedes finance in relation to undertaking a voluntary termination on my current vehicle finance. I have been instructed that I am not able to do this as my hire purchase agreement is non regulated, can you please advise if this is the case?

  68. Stuart Masson

    Hi Ross. You will need to look at your finance contract to see what it says. If you have the right to voluntarily terminate then there will be a clause in there which explains your rights and what the exact amount is.

  69. Hi Stuart was wondering if you could help I bought a car on finance in 2014 I initially give £3.500 as deposit but due to not having the best credit the garage said that the only company would accept me was one with higher interest rates.we had a meeting in the dealership with the broker and the lad from garage and when reading the contract I relised that I was borowing only 9.000 plus my deposit which made up the cars actual value but it stated total to repay was 21.000 due to high interests I asked the dealer about this and the broker in which he said you can either after two years voluntary give car back or if you have solid payments none missed we will come to the dealership after two years and re sell you a new car give us the old one and we reduce your interst rates on new purchase as you have proven to us good payment history after the two year mark I called the garage and I had never missed a payment in which I was informed they had gone bust but a new company was now trading on their behalf and a solicitors would now collect payments which I was then informed we couldnt now refinance and had to keep paying the set payment of £388 per month I disputed this with them at the solicitors and was told it was set and thats that as the client new company no longer take calls if it is possible I wondered if you had any advice please.kind regards mikey

  70. Stuart Masson

    Hi Mikey. The dealer going bust shouldn’t be a problem, as once the car is sold they no longer have any interest in the vehicle. The car is owned by the finance company, so you would need to contact them rather than the dealer or the dealer’s solicitors.

  71. Hi

    I just needed some guidance, you stated it 50% owed, does this include the final balloon payment if it is a PCP set up? or is it just the amount borrowed on the monthly payment?

    Many Thanks
    Derek

  72. Stuart Masson

    Hi Derek. Yes, in a PCP the 50% VT point includes the final balloon payment, as it is money borrowed that needs to be repaid.

  73. Hi I got a car in September 2015 on hire purchase the car was priced at £17,220.00 we part exchanged our car for £3,888.00 the dealer said they were putting in a finance deposit allowance of £3,000.00 so amount financed was £10,332.00 we have paid 15 payments totalling £1,691.55 another payment of £112.77 due in a few days so can I hand the car back? their is a section in the agreement that states: Termination: your rights, you have the right to end the agreement, to do so write to the person you make your payments to. They will than be entitled to the return of the goods and to half the total amount payable under this agreement, that is £8,610.00 if you have already paid this amount plus any overdue instalments and have taken reasonable care of the goods you will not have to pay any more, but when I phoned them today the man said I had to pay half the amount that I financed so half of £10,332.00 is this right? We have never been late or missed a payment and the car is immaculate, they also said I had to fill out forms which from reading this post I wont.

  74. Thanks for the advice, you’ve been a massive help..

  75. Hi Stuart, my father purchased a vehicle and is 5 paymenst ( approx £1300 ) off of the 50% figure for a VT. Only problem is he is no longer allowed to drive as he has been diagnosed with dimentia.He was previously a courier so he has been forced into retirement on very little income following this diagnosis. Can medical circumstances be brought into the reason for the VT or will tehy insist on that £1300 being paid despite the fact he has virtually no income?

  76. Stuart Masson

    Hi Mel. There are usually no provisions for medical circumstances to be used to cancel a finance contract, so you are likely to have to pay the outstanding £1,300 to VT the vehicle.

  77. Stuart Masson

    You will need to go by what is written in your contract. The £8,610 includes any deposit (inc part-exchange), so you will need to calculate exactly what you have already paid.

    Once you give written notice that you are invoking your right to VT, you do not need to fill in any of their forms.

  78. Hi Stuart.

    I’ve had a lease BMW for the last 2 years and it’s due to be sent back this week. I am 25,000 miles over the agreed limited of 10,000 miles a year.

    What would you suggest if anything, I can do to try and void the excess mileage cost or reduce the bill on arrival?

    Many thanks for your time on this one.

  79. Hi Stuart
    I’m handing back a Citroen after paying 50 % of the finance. They are saying I must pay £250 to cover the early termination of the gap insurance which was loaded on to the finance. This was not explained when I signed the deal. Do I have any rights to refuse to pay?

  80. Stuart Masson

    Hi Morgan. If your finance has come to the end of the agreement and the car is being handed back to the finance company, they will definitely charge you for the excess mileage and they are perfectly entitled to do so.

  81. Stuart Masson

    Hi Joe. It’s a bit dubious and unclear. On one hand, you can’t VT an insurance product; on the other hand, you should be able to hold the finance company to the VT amount in your contract since that’s what the contract says.

  82. A slightly unusual question and not one I can find an answer to: I’ve started a VT process but on reflection I don’t want to go ahead with it. I’ve had a letter from Hyundai, and they want me to make an appointment for collection (and pay a £70 collection fee). Can I back out and continue with my finance agreement?

  83. Stuart Masson

    Hi Jeremy. Once you write to the finance company to voluntarily terminate the agreement, you have ended the contract. You can contact the finance company and tell them that you have changed your mind, but they are not obliged to go along with it. They may well be happy to, as it is probably in their best interests, but that’s not a guarantee that they will.

  84. Hi Stuart,

    I’m about to do a VT and hand my VW Polo back to the dealership. The car is in good condition with a full service history however the next service and MOT is due on 4 March. If I hand my car back to VW before 4 March, is it their responsibility to conduct the service and MOT? I am worried that the inspection won’t be carried out until after 4 March (even though I will have handed it back before then) and that I’ll be penalised.

    Further, I have lost a spare key which I accept responsibility for. Will inspectors accept a replacement made by a company like Timpsons, or will the replacement key have to be made by VW?

    Regards,
    Euan

  85. Hi,
    I am currently in a 42 month pcp and am needing to get a bigger car. I have been told I can wait till June or pay £519 to give car back. Now, if I go to another dealer, would they pay the £519 off the pcp if I buy a car off them? Meaning, would they fit it into the deal and give me the money to pay it off or do I have to wait?

  86. Stuart Masson

    Hi Euan. If you have written to terminate the agreement, then you can legitimately argue that servicing and MOT due after that date is not your problem.

    If the replacement key is a like-for-like replacement, it should not matter if it was not supplied by Volkswagen. However, the key issue (sorry, pardon the pun) is whether or not the Timpsons key is exactly the same as that supplied by a VW dealer. Of course, the inspector may not even notice or care, as long as it works. The finance company will not be inspecting the car themselves; it will be outsourced to an auction house, who will inspect the vehicle and then dispose of it via trade or public auction.

  87. Stuart Masson

    Hi Stuart. If you want to buy another car, the dealer will settle your outstanding finance as part of the part-exchange process. If that means that they cover whatever you still owe (or more), great. If they value your car at less than what you still owe (which includes the balloon/GMFV amount), then you are liable for the difference.

    For more information, have a read of our article about settling your PCP early.

  88. Hi Stuart, Yes I went to get another car and the amount owed to the offered figure for my car shot the payments right up. If I pay £519 I can give the car back which means car to buy will be a straight buy and bring payments back to normal. Would the dealer pay the £519 for me to return the car in the deal?

  89. Stuart Masson

    Sorry, I guess you mean that you are £519 short of being able to VT the car. No, another dealer will not be able to get involved in that; you will have to do that yourself.

    The settlement amount on your car will probably be considerably more than £519 plus its current value. By VTing the car, you will be avoiding the negative equity you will currently have.

  90. Hi Stuart  TCE, I find myself in a slightly confusing situation, 11 months ago I part exchanged my X3 in for a New X4 from a BMW main dealer, the deal at he time was a PCP Lease of which my X3 made up for £14k of the purchase price of the new car, I told the salesperson my average mileage was around 10 to 12k per year, but when I got the paper work he had changed this to 8k, when I asked him he said to get the monthly figure to where I wanted it to be he’d changed it, and not to worry about the extra mileage and go and enjoy the car! now after 11 months I find that the X4 is not the car for me and want to change it for an X3, but perhaps change over to a Hire Purchase agreement from PCP, how do I stand on this change over?

  91. Stuart Masson

    Hi Paul. If you have had the car for less than a year, the chances are you will have a substantial amount of negative equity. So you will probably need a few thousand pounds to clear that before you can even start to think about your next car. For more information, have a read of our article on settling your PCP early.

    A hire purchase will cost you considerably more per month because you are paying off the whole car instead of just the predicted depreciation.

  92. Hi Stuart. I am only 6 months into my PCP with Nissan. I need to hand the car back as i have lost my job, i am unable to VT the car back, where do i stand if anywhere at all? Thanks

  93. Stuart Masson

    Hi Daniel. Unfortunately, there is no provision in your finance agreement to end the agreement early because you have lost your job.

  94. Yes, Correct Stuart. Okay so dealer cannot get involved. Currently my car is owing £6020. Dealers offering £4800ish , so to get a new car takes payments up to cover existing finance. I have spoken to my Finance company and they said I can pay £519 currently and hand car back. Which then leaves me free to purchase another car. Is this correct or does it leave a negative mark on my credit file? I dont see why as could hand car back in 3 payments time and if I pay it off , well I have paid it off so cant see a problem?
    Thanks.

  95. Stuart Masson

    You can pay £519 to voluntarily terminate now, or make another three monthly payments and terminate then. It should work out to the same thing. Voluntary termination is your legal right, so it will not negatively affect your credit score or affect your ability to get finance elsewhere. The same finance company may choose not to finance you again, however (since you are walking away from your contract and costing them money, and there’s nothing they can do about it).

    If you pay it off, it’s your car. Either way, the finance agreement will be concluded.

  96. Hi Stuart, Couldnt reply above. If I pay it off , the £519 . It isnt my car. They then come and pick it up. But this still shouldnt affect me . Correct?

  97. Hi. I’m currently going through VT, I’ve had people come to look at my car to assess scratches etc, the car is only an 08 plate and most of the scratches and dents were already there when I bought it. If they come back with an invoice do I have the right to refuse to pay or am I legally abliged to pay ? Also is it legal for them to charge you for missing a service on the car ?

    Chris

  98. I have also read my contract and it says that I can only return the goods if I’ve paid over 50% and have taken ‘REASONABLE CARE’…. what does reasonable care mean ??

  99. Hi Stuart,

    I have taken out a Mercedes C220 on PCP (3 years / 15,000 miles) in July 2015. The car price including finance was around the £36k mark. The balloon payment after 3 years was set at circa £18k. As my circumstances changed at the end of last year (lost job / new job) I have contacted Mercedes Benz finance to see if I could re negotiate the deal for lower monthly payments. Their answer was “tough love” stays as it is. With help from family I have managed to keep up with the payments for now but its not the way forward and I want to return the car. I have read through this article and a lot of the comments and followed the instruction from LegalBeagles and sent Mercedes Benz finance a letter for voluntary termination. Today I have received a letter from them accepting the voluntary termination however on the 50/50 rule they stating that I owe them £8,630 as shortfall?

    Car price: 36,831.76 (inc. interest)
    minus
    Balloon payment: £18,000.00 (guaranteed car value after 3 years if kept within reasons and no excess mileage)
    equals
    £18,831.76

    I have so far paid £9,785.88 which in my calculations is more then half?

    Am I right in thinking that I shouldn’t be paying the aforementioned £8,630 and could return the vehicle?

    Thanks
    Lewis

  100. Stuart Masson

    Correct.

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