End a car finance deal early or at term without overpaying

This guide is for UK drivers with a hire purchase (HP) or personal contract purchase (PCP) car finance agreement who want or need to get out of it – because the payments are too high, their circumstances have changed or the agreement is ending. Many people pay far more than necessary by part-exchanging into negative equity, missing their legal right to hand the car back, or accepting unfair damage and mileage charges. You will identify your agreement type, compare the real cost of each option with your own figures and follow the right process to finish. At the end you will have a decision, the letters to send and a closed agreement with nothing unexpected left on your credit file.

What is inside

• Full step-by-step method8 detailed steps with decision points
• Ready-to-use templatesVoluntary termination letter · Request for settlement and agreement information · Letter disputing return damage charges
• Timed action plan8 stages from “Day 1” to “1–2 months later”
• Costly mistakes to avoid4 traps and what to do instead
• Complete checklist12 items to tick off
• Insider tips and fixes4 tips and 4 common problems solved

Step by step

1. Identify exactly what kind of agreement you have

   Find your credit agreement, in your paperwork or the lender's online account, and look at the title and the box headed something like "Termination: your rights". If it says hire purchase, conditional sale or PCP and is regulated by the Consumer Credit Act 1974, you normally have a legal right to voluntary termination. If it is a lease, often called personal contract hire (PCH), voluntary termination does not apply and early exit is governed by the early termination charges in your contract, so ask the lender for a written figure. If you bought the car with a personal loan, you already own it: selling it and repaying the loan is usually simplest. Write down the total amount payable, the figure shown as half of that amount, the optional final payment (balloon) on a PCP, your annual mileage allowance and the excess mileage charge per mile. These numbers drive every decision in this guide.