Voluntary Termination and Redemption Figures

TCE home 2021 Forums Car finance Voluntary Termination and Redemption Figures

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    • #148032


      I have made enquiries with the finance company about ending my PCP agreement. The company has provided me with details of total payments made, “total amount due” and also confirmation of the shortfall payment due. Separately, an advisor from the said finance company advised me to sell my car privately and repay any outstanding shortfall. I am considering this option, however, on enquiring about a redemption figure for my vehicle via the dealership, I have discovered that the redemption figure is hugely different (higher) than the “total amount due” quoted by the Finance Company for voluntary termination. Is this correct? should a redemption figure be higher?

    • #148349
      Stuart Masson

      Hi Debz. You are talking about two different things, so you will get two different numbers.

      Voluntary termination is your legal right, and the relevant amount is 50% of the Total Amount Payable. This amount should be clearly stated in your finance agreement.

      Redemption is another description for early settlement (it’s not commonly used, but we’ll add it to our glossary). This is the amount required to settle your outstanding finance in full. It’s basically 100% of the total amount payable minus whatever you’ve already paid and a reduction of the amount of interest payable because you’re settling early.

      If you want to sell the car and pay off your finance, you need to pay the early settlement (redemption) amount.

      If you want to give the car back, you need to pay (or have already paid) the voluntary termination amount.

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