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    Has anyone ever voluntary terminated car finance?

    If you buy a car on pcp or similar, you're legally allowed to hand it back once 50% of the total amount borrowed is paid. I'm doing this shortly and just wondered if anyone has done it before and how straight forward it was?

    27 Comments

    My brother did it a few years back albeit via a dealer as purchasing a second car. They went over it with a very fine tooth combe and charge for every tiny scratch, dint, scuff or change you have made from standard manufacture. I even think they charged if you had non original brand/model tyres. Just be careful as the bill can soon add up.
    Edited by: "P13ULC" 3rd Jan

    I think you can do this on HP but not on a PCP. On a PCP you still borrow the full amount of the car so unless your final balloon payment is very small its unlikely you will have paid half the total loan off.
    Edited by: "ed2093" 3rd Jan

    I haven't done this personally, but I work in the car finance industry. I assume by PCP you mean Hire Purchase or Conditional Sale Agreement? If this is the case, you can voluntarily terminate a Regulated Agreement under Section 99 of the Consumer Credit Act by writing to the finance company (their details will be on the Agreement you signed). This HAS to be done in writing (Section 189(1) of the Consumer Credit Act) and I would recommend sending it by Recorded Delivery so you have proof it was received. You should ensure any arrears are paid, and the vehicle is in a roadworthy condition and in a reasonable condition (allowing for "fair wear and tear") commensurate to its age and mileage, otherwise you may become liable to the finance company to pay for any damage to bring the vehicle to a "reasonable" condition. Your liability should be limited to the balance of half the total amount payable under the agreement, plus any arrears plus any damage costs. I would also recommend reading thoroughly the terms and conditions to ensure you have no other contractual liabilities to the finance company. Hope that helps a bit. If in doubt speak to a lawyer (the CAB usually have a duty lawyer who can help). I would urge you NOT to use any of these consumer forums as they are full of "barrack room" lawyers who, quite frankly, don't know their **** from their elbow!!

    If it is a contract hire agreement where you are effectively renting the vehicle and hand it back at the end of the agreement (you never acquire title or ownership of the vehicle) then Section 99 of the CCA does not apply. You would need to check the terms and conditions of the agreement. Some finance companies do not give you the right to terminate the agreement early. You would likely be liable for any arrears, any damage to the vehicle, any mileage (calculated pro-rata) and future rentals (less a discount for accelerated payment). Again, seek legal advice from a lawyer if you are in any doubt and AVOID any consumer rights/legal forums!

    Best thing to do is contact the finance company and speak to them. Make a note of who you spoke to and the date and time of the call though!

    funny how it's very easy to get into with promises of this n that but can be difficult to get out of.

    I am currently into 18mths of a cpc deal, car is as new with 8k miles and hoping to walk away (trade in) just before 3yrs mot is due but somehow don't think it will be as easy as that.

    Here's hoping condition of vehicle will save me!

    I handed my car back after 3 years (didn't want to buy another brand new car), just looked at it for about 10 seconds, looked inside, checked the mileage signed the termination agreement and that was that! Outstanding balance was put down as settled by them, very straight forward for me.

    Original Poster

    Chewystu

    I haven't done this personally, but I work in the car finance industry. … I haven't done this personally, but I work in the car finance industry. I assume by PCP you mean Hire Purchase or Conditional Sale Agreement? If this is the case, you can voluntarily terminate a Regulated Agreement under Section 99 of the Consumer Credit Act by writing to the finance company (their details will be on the Agreement you signed). This HAS to be done in writing (Section 189(1) of the Consumer Credit Act) and I would recommend sending it by Recorded Delivery so you have proof it was received. You should ensure any arrears are paid, and the vehicle is in a roadworthy condition and in a reasonable condition (allowing for "fair wear and tear") commensurate to its age and mileage, otherwise you may become liable to the finance company to pay for any damage to bring the vehicle to a "reasonable" condition. Your liability should be limited to the balance of half the total amount payable under the agreement, plus any arrears plus any damage costs. I would also recommend reading thoroughly the terms and conditions to ensure you have no other contractual liabilities to the finance company. Hope that helps a bit. If in doubt speak to a lawyer (the CAB usually have a duty lawyer who can help). I would urge you NOT to use any of these consumer forums as they are full of "barrack room" lawyers who, quite frankly, don't know their **** from their elbow!!



    ​It's a PCP. I know I'm allowed to do it when 50% of the total amount of the loan, including final payment is payed, the dealer has confirmed this and it's in the finance agreement. I just wondered how straight forward it is bearing in mind the finance company won't want me to do it as there's negative equity in the car.

    Original Poster

    P13ULC

    My brother did it a few years back albeit via a dealer as purchasing a … My brother did it a few years back albeit via a dealer as purchasing a second car. They went over it with a very fine tooth combe and charge for every tiny scratch, dint, scuff or change you have made from standard manufacture. I even think they charged if you had non original brand/model tyres. Just be careful as the bill can soon add up.



    ​I'm expecting that. However, they can't charge for general wear and tear, ie. stone chips, slightly scuffed alloys. They might try and charge but they can't legally make you pay.
    Cheers.

    Original Poster

    ed2093

    I think you can do this on HP but not on a PCP. On a PCP you still borrow … I think you can do this on HP but not on a PCP. On a PCP you still borrow the full amount of the car so unless your final balloon payment is very small its unlikely you will have paid half the total loan off.



    ​I'm almost 3 years into a 4 year deal. The final payment would be £11k ish, I'm half way through the total in april.

    Original Poster

    slimemonkey

    I handed my car back after 3 years (didn't want to buy another brand new … I handed my car back after 3 years (didn't want to buy another brand new car), just looked at it for about 10 seconds, looked inside, checked the mileage signed the termination agreement and that was that! Outstanding balance was put down as settled by them, very straight forward for me.



    ​That's the kind of answer I was hoping for! Cheers.

    I believe the British Vehicle Rental and Leasing Association (BVRLA) of which most finance companies are members, supply details of what is "fair wear and tear" (i.e how long a scuff on a wheel can be, how long a scratch can be, etc). You can ask for a copy from the finance company or check out the BVRLA's website (http://www.bvrla.co.uk/service/fair-wear-and-tear-guides). I think you have to be a member to access the guide on the website, but you should be able to request a copy from the finance company if needed. When the vehicle is picked up it should be inspected by the collection agent and a vehicle condition report completed. Make sure you are there and agree details of the vehicle condition that the agent notes down, and that you are given a copy of that report; this could be important if the condition of the vehicle is disputed later on. Also ensure the recorded mileage is correct.

    If it's in the Terms and Conditions of your Agreement that you can terminate the Agreement at 50% then that is fine, but please bear in mind that the dealer is usually a separate entity to the finance company, and it is not uncommon for the dealer to advise you incorrectly of your rights under the agreement.

    Sorry to be negative but I am just trying to outline the pitfalls so you are prepared for the worst case scenario! Good luck - I hope all goes smoothly for you!

    andyb83

    ​I'm expecting that. However, they can't charge for general wear and t … ​I'm expecting that. However, they can't charge for general wear and tear, ie. stone chips, slightly scuffed alloys. They might try and charge but they can't legally make you pay. Cheers.



    If the agreement you signed provides for payment of damage to the car then they can sue you in the civil court under contract law. No one wants to go to Court, have a Judgment made against them and enforcement proceedings issued, ultimately. There are certain circumstances where they can "make" you pay (attachment of earnings, third party debt order, charging order/order for sale) but ultimately if you don't have the money or any assets, then no, they won't receive their money.

    Did it recently at the suggestion of the dealer supplying my new car. Very easy and smooth process (5mins on phone) and car was picked up as arranged. The guy inspected the car, but not with a fine tooth comb, happy to ignore a couple of light dents (1cm) in driver door. I got the impression that it helped by having the car neat and cleaned for him.
    Only hiccup was that BMW finance took another installment from my bank, but refunded it same day.

    I have been told that doing this does not affect your credit rating, however, I recently checked mine on Noodle and found it had gone down a bit. Maybe coincidence.

    Original Poster

    airbus330

    Did it recently at the suggestion of the dealer supplying my new car. … Did it recently at the suggestion of the dealer supplying my new car. Very easy and smooth process (5mins on phone) and car was picked up as arranged. The guy inspected the car, but not with a fine tooth comb, happy to ignore a couple of light dents (1cm) in driver door. I got the impression that it helped by having the car neat and cleaned for him.Only hiccup was that BMW finance took another installment from my bank, but refunded it same day.I have been told that doing this does not affect your credit rating, however, I recently checked mine on Noodle and found it had gone down a bit. Maybe coincidence.



    ​Thanks for that, mines with BMW too although I've ordered my next car from Mercedes so they might not be quite so lenient! Was there any paperwork to fill in?

    Original Poster

    Chewystu

    I believe the British Vehicle Rental and Leasing Association (BVRLA) of … I believe the British Vehicle Rental and Leasing Association (BVRLA) of which most finance companies are members, supply details of what is "fair wear and tear" (i.e how long a scuff on a wheel can be, how long a scratch can be, etc). You can ask for a copy from the finance company or check out the BVRLA's website (http://www.bvrla.co.uk/service/fair-wear-and-tear-guides). I think you have to be a member to access the guide on the website, but you should be able to request a copy from the finance company if needed. When the vehicle is picked up it should be inspected by the collection agent and a vehicle condition report completed. Make sure you are there and agree details of the vehicle condition that the agent notes down, and that you are given a copy of that report; this could be important if the condition of the vehicle is disputed later on. Also ensure the recorded mileage is correct.If it's in the Terms and Conditions of your Agreement that you can terminate the Agreement at 50% then that is fine, but please bear in mind that the dealer is usually a separate entity to the finance company, and it is not uncommon for the dealer to advise you incorrectly of your rights under the agreement. Sorry to be negative but I am just trying to outline the pitfalls so you are prepared for the worst case scenario! Good luck - I hope all goes smoothly for you!



    ​Thanks, I'm sure it will be ok!

    is the car worth more than the outstanding balance? i presume not if you are asking these questions but an alternative would be to trade/sell the car, less worry regarding 'wear and tear' then

    Original Poster

    adamspencer95

    is the car worth more than the outstanding balance? i presume not if you … is the car worth more than the outstanding balance? i presume not if you are asking these questions but an alternative would be to trade/sell the car, less worry regarding 'wear and tear' then



    ​No, significantly less. That is one reason for VTing the agreement.

    andyb83

    ​Thanks for that, mines with BMW too although I've ordered my next car f … ​Thanks for that, mines with BMW too although I've ordered my next car from Mercedes so they might not be quite so lenient! Was there any paperwork to fill in?



    yes, just a downloadable form to sign and return.
    I don't think that BMW finance were remotely bothered, certainly they did not ask who my next car was coming from.

    Original Poster

    airbus330

    yes, just a downloadable form to sign and return.I don't think that BMW … yes, just a downloadable form to sign and return.I don't think that BMW finance were remotely bothered, certainly they did not ask who my next car was coming from.



    ​Brilliant, thanks. What about the V5, was that just filled in and sorted when they came to collect the car?

    Did it with my partners Yaris, easy process took about 2 weeks from first contact to have it arranged and gone

    Had 4 of the cheapest tyres on it, no real marks mind on the body work

    Original Poster

    Daaaavvveee

    Did it with my partners Yaris, easy process took about 2 weeks from first … Did it with my partners Yaris, easy process took about 2 weeks from first contact to have it arranged and gone :)Had 4 of the cheapest tyres on it, no real marks mind on the body work



    ​Thanks, I'm starting to feel a little more comfortable with it now!

    I did this many year ago when we bought our first new car. A VW Golf, in 18 month it went though 3 clutches, the accelerator cable kept coming unattacted and even the thing got flooded the first day we drove it in the rain because they had left all the holes unfilled under the car. VW service didn't want to know so as soon as I had chance I drove it to the finance companies head office and gave them the keys. They were very miffed and wanted to inspect the car but the terms of the agreement were clear "once you have paid 50% of total you can return the car and owe nothing".

    no, i dont need finance, i have enough money thank you, Finance is just a government trick to control you

    a fools game

    Original Poster

    psmith1958

    no, i dont need finance, i have enough money thank you, Finance is just a … no, i dont need finance, i have enough money thank you, Finance is just a government trick to control youa fools game



    ​What are you talking about? You love to make yourself look foolish, don't you?!

    psmith1958

    no, i dont need finance, i have enough money thank you, Finance is just a … no, i dont need finance, i have enough money thank you, Finance is just a government trick to control youa fools game



    ​I'm about to buy a brand new car.

    Cash price, £15k

    On finance, I get a £1600 deposit contribution from Ford and the cost of finance over 3 years, £900.

    Getting it on finance costs £700 less than parting with £15k cash.

    Which seems more sensible now?
    Edited by: "adamspencer95" 11th Jan

    Original Poster

    adamspencer95

    ​I'm about to buy a brand new car.Cash price, £15kOn finance, I get a £1 … ​I'm about to buy a brand new car.Cash price, £15kOn finance, I get a £1600 deposit contribution from Ford and the cost of finance over 3 years, £900.Getting it on finance costs £700 less than parting with £15k cash.Which seems more sensible now?



    ​Exactly. Every dealer offers a better price on finance than they do cash. I've just saved over £4k ordering a new Merc and putting it on finance. I can just pay the finance off in a month if I choose to.
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