Can I give my car back to the finance company?
If you're struggling to keep up with your car payments or your financial situation has changed unexpectedly, you might be wondering, "Can I give my car back to the finance company?" Here's everything you need to know about returning a financed vehicle and what it entails.
Can you give a car back to the finance company?
In some cases, you may be able to return your car to the finance company, but this depends on your finance agreement and the lender’s policies. Some agreements allow for Voluntary Termination (VT) or Voluntary Surrender, but specific conditions apply.
Voluntary Termination (VT) – Available for Hire Purchase (HP) and Personal Contract Purchase (PCP) finance agreements allows you to end the contract early if you’ve repaid at least 50% of the total amount payable, including interest, fees, and the balloon payment (for PCP). The car must be returned in a condition that meets the lender’s fair wear and tear guidelines.
Voluntary Surrender – This involves returning the car before you’ve reached the 50% repayment threshold. Unlike VT, you remain responsible for any outstanding balance on the loan, and it may impact your credit rating.
Can I cancel my car finance and give the car back?
You cannot simply cancel a finance agreement, but you can end it early under certain conditions:
voluntary termination – If you have paid at least 50% of the total amount payable, you have the legal right to terminate the agreement and return the car.
Request a Settlement Figure – If you want to pay off the agreement in full and own the car, you can request a settlement figure from your finance provider.
Voluntary Surrender – If you haven’t paid 50% but need to return the car, you can voluntarily surrender it, but you’ll still owe any remaining balance.
Each option has different financial implications, so it’s essential to check your finance agreement and speak to your lender before proceeding.
What happens if I give my car back on finance?
If you choose to give your car back to the finance company, the process usually involves ‘voluntarily surrendering’ the vehicle. This means you return the car to the finance company, and they check its condition. Depending on the terms of your agreement, you may still be responsible for certain costs, such as outstanding payments, early termination fees, excess mileage fees, or damages beyond normal wear and tear.
Can I return a financed car within 6 months?
Returning a financed car within six months is possible, but it's important that you check your finance agreement first. Some finance agreements may have clauses that allow for early termination of the contract with minimal fees, while others may charge significant fees for ending the agreement early. Returning the car within six months may also have different implications compared to returning it later in the agreement term which might carry fewer fees, depending on how long your term is, so always check the terms before making a decision.
Can I give my car back on finance if I can't afford it?
If you find yourself unable to afford your car finance payments due to a change in your circumstances, contact your finance provider – They may be able to offer a payment holiday or restructure your payments. Returning the vehicle to the finance company may also be possible, however, it's important to consider the potential consequences before you do this. Returning the car voluntarily may affect your credit rating and could mean you are charged additional costs, such as fees for early termination or excessive wear and tear. An alternative option might be to sell your car privately, if allowed by the lender. Selling the car and using the proceeds to settle the finance may be an option.
Ignoring the issue could result in defaulting on the loan, which can significantly impact your credit rating.
Can you walk away from car finance?
Walking away from car finance is possible through voluntary termination if the agreement, but you should make sure you understand the process and implications before you go ahead. Voluntary termination allows you to end the finance agreement early, but you may still be responsible for certain costs, and it can affect your credit rating.
What happens if you can't afford car finance anymore?
If you're struggling to afford car finance payments, it's important to speak with the finance company as soon as possible and explain your situation. They may offer options such as restructuring the loan, deferring payments, or exploring alternative solutions. Ignoring the issue can lead to defaulting on the loan, which can have serious consequences for your credit rating and financial stability.
Can handing your car back affect your credit rating?
Handing your car back to the finance company can impact your credit rating, especially if it's done through voluntary surrender or if you default on the loan. Missed payments or defaulting on the loan will affect your credit score and can remain on your credit report for several years, and may mean you are refused car finance or other types of credit in future. Voluntary Termination does not negatively affect your credit score as long as all payments have been made on time.
Can I give a faulty car back to the finance company?
Returning a faulty car to the finance company is possible under certain circumstances, particularly if the vehicle has significant defects that affect its safety or usability. You may have the right to reject it or request repairs under the Consumer Rights Act 2015 or your finance agreement’s warranty terms. Some car finance agreements come with warranties, even on used cars, which may cover you for any faults that crop up with the vehicle within a certain time frame. However, you may need to follow specific procedures outlined in your finance agreement or consumer protection laws to hand the car back, so it’s worth checking the details with your finance company before trying to return it.
Can I get a break from my car finance?
Seeking a break from car finance, such as a payment holiday, loan restructure or temporary suspension, may be possible depending on your finance provider's policies and your individual circumstances. You should contact your finance company as soon as you encounter difficulties to explore available options and avoid missing payments, as this can have negative impacts on your credit score.
How does voluntary termination of car finance work?
Voluntary termination allows you to end your car finance agreement early by returning the vehicle to the finance company. To qualify, you typically need to have paid off a certain percentage of the total amount due, and the car must be in good condition outside of fair wear and tear. However, you should always check your finance agreement first, as specific conditions may apply.
How much will it cost to end car finance early?
The cost of ending car finance varies depending on factors such as the finance agreement terms, outstanding balance, and potential fees. Some finance agreements may charge fees for early termination, while others may have clauses allowing for voluntary termination with additional costs. You should start by reviewing your finance agreement carefully and consult with your finance provider to understand your settlement figure and the potential costs involved in ending your car finance agreement early.