Thinking of ending your car finance? There are several ways you can cancel car finance early but how you do so, can depend on a few different factors. Things like when you took out the agreement, how much you’ve paid off, or the type of car finance you have in place, can affect which route you need to go down. So, let’s look at all avenues when it comes to ending your car finance and which is best for you.
Cancelling car finance within 14 days.
No matter if you have a car on PCP or HP, your agreement will come with a 14-day cooling-off period for car finance. Under the Consumer Credit Act 1974, you are legally allowed to withdraw from a car finance agreement. The 14-day period starts when you sign the agreement. If you have changed your mind about your agreement, you will need to contact the lender and give them notice of you cancelling your agreement. You don’t need to give a reason for cancellation, but you will need to let the lender know at the earliest possible convenience.
PLEASE NOTE: UK Car Finance is a car finance broker and not a lender. If you wish to cancel your car finance agreement, you will need to speak with the lender directly. If you’re sure who your car finance lender is, please feel free to contact us, and we will be able to help.
What should I do if my car on finance is faulty?
In some cases, you may wish to cancel your car finance if the car is faulty or breaks down. The first thing you need to do is speak to the dealership that provided the car and let them know there is a fault. If you’re not satisfied with the service from the dealership and want to end your car finance agreement, you will need to contact the owner and let them know. The lender may ask for evidence of the fault and then proceed as they see fit. You should never simply stop paying your car finance whilst going through this process as it can seriously affect your credit score and your ability to borrow in the future.
If you’re unsure of your rights to cancel your car finance, refer back to your car finance agreement to find out.
Which type of car finance is best for you?
Feel like you’ve chosen the wrong car finance agreement and looking to cancel? Find out which car finance agreement is best for your situation.
Paying off your car finance early.
If the 14-day cooling-off period has passed but you still want to end your car finance early, there are a few options available to you. First, you’ll need to get in touch with your lender and request a settlement figure. The settlement figure is the amount of money you have to pay to settle the finance. Then, you’ll have different options depending on which type of car finance agreement you have in place.
Ending PCP car finance early.
You can end your PCP deal early through Voluntary Termination at any time. If you wish to end the agreement early and keep the car, you will have to pay the settlement figure and then become the legal owner of the car.
If you don’t want to keep your PCP finance car, you can return the car to the dealership. However, you will need to have paid 50% of the agreement first. Speak with your lender to see when the 50% mark would be and if agreed, you will be able to hand the car back to the lender.
If you’re unsure of any of the Terms and Conditions of your PCP agreement, always refer back to your car finance agreement, which will set out the rules for cancellation. You should have received a copy of this when you had taken out the finance. If you can’t locate it, speak with your car finance lender.
How to settle HP car finance early.
Just like PCP car finance, you can settle your Hire Purchase car finance agreement at any time through Voluntary Termination. It works in the same way as PCP, and you should first request a settlement figure from the lender. Then, either pay the settlement figure and keep the car or return the car to the lender. Before you can return the car, you will need to have paid more than 50% of the agreement. If you’re not sure how far through your agreement you are, please contact your lender.
Can I end my car finance early if I have negative equity?
It is possible to end your car finance early, even if you have negative equity. Negative equity car finance is when the amount you owe on your car finance is more than the value of your car. You can end your car finance deal through voluntary termination if you have negative equity but you may need to pay the difference between what your car is worth and what you owe for car finance.
If you can’t afford to pay off your loan with one lump sum, you could continue to make the repayments as negative equity usually balances out by the end of the agreement.
Alternatively, you can ask the lender if they would allow you to make overpayments to help clear the negative equity.
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