Your PCP agreement can be voluntarily terminated as long as you’ve paid at least 50% of the total finance amount back to the finance company. However, if you haven’t repaid 50% of the total finance amount, you can still end the agreement if you pay off the difference.

What is the half rule with car finance?

The ‘half rule’ Your documentation (the agreement) from the finance company must show the figure for half the PCP price of the car. If you have paid less than half of the PCP price of the car, you can give the car back, and you will only owe the difference between what you have paid, and half of the price of the car.

Who owns the car during the finance agreement?

the finance company
When a car is purchased through a finance agreement, – such as a Hire Purchase or a Lease Purchase agreement, the vehicle legally belongs to the finance company until the agreement has been settled and all outstanding repayments have been made.

Can you change your mind on car finance?

The good news is that you do have the right to cancel your car finance without paying any penalties. You can do this during the “cooling off” period soon after you take out a contract, or through a process called voluntary termination.

Can you make early repayments on car finance?

If you’re struggling to meet your car finance payments, or simply want to cut costs, you can pay off the agreement early or return the car. But there are some conditions and costs attached to doing this, so don’t make a decision until you know exactly what they are.

Can you finance your car during a finance agreement?

Personal Contract Purchase is a flexible finance option where a chunk of the payment is deferred until the end of the finance agreement. Due to the deferred payment, the monthly repayments (usually paid between 12 and 48 months) are often lower than HP agreements. At the end of your contract you will have three options:

What to do if you have a car finance problem?

If you’ve got a debt problem you can apply for a moratorium at any time, although we recommend you seek debt advice first . When you buy a car with a hire purchase (HP) or conditional sale agreement the vehicle remains the property of the finance company until you’ve paid the last payment under the agreement.

What happens if I fall behind on payments on my car finance?

You can’t sell the car and if you fall behind on payments, the finance company can repossess it. When you buy a car with personal contract purchase (PCP) the finance provider still owns the car. The agreement is normally over three years.

How does a hire purchase finance agreement work?

Hire purchase (HP) is another popular type of car finance agreement. With a HP agreement you’re usually required to pay an initial deposit – which tends to be around the 10% mark – followed by a number of monthly repayments. Once you’ve finished your monthly repayment schedule, ownership of the car transfers from the car finance company to you.