We get it, things change. Whether your car no longer suits your lifestyle or you’re struggling to stay on top of monthly payments, there are many different reasons why you might be asking “can I give my car back to the finance company?” The answer will depend on the type of contract you’ve taken out, as well as other factors like how much of your loan has been paid off.

Below, we take a closer look at this scenario and answer all your questions about whether you can give your car back to the finance company.

Common scenarios where motorists return cars

Life doesn’t always work out how we plan it. Whether it’s finances or personal circumstances, things can change at the drop of a hat. With car finance deals lasting several years, those changes may well impact your affordability or the suitability of your car.

For one, your financial circumstances may have changed, and you can no longer commit to monthly repayments on your vehicle. This may happen for all kinds of reasons, from switching jobs or changing careers to absorbing additional expenses like purchasing a house or welcoming a baby to the family.

Alternatively, your personal circumstances might have changed, and your current vehicle no longer suits your lifestyle. For example, you may have purchased a compact Fiat 500 on a three-year PCP loan but find that two years later, it’s far too small to accommodate your new mountain biking hobby or pet dog. 

What to do when car finance isn’t working out

If finances are the reason you want to cancel your car loan contract, the first step is to talk to your finance provider. It’s best to do this as soon as possible and honesty is always the best policy. Defaulting on your payments could not only incur extra charges but leave a black mark on your credit score, which could affect your eligibility to take out loans in the future.

Many lenders are happy to chat about your options and come up with a solution, especially if your financial difficulties are temporary. This could include deferring payments for a few months or extending the period of the loan to bring down your monthly repayments. Contrary to popular belief, most lenders don’t want to squeeze you dry and are keen to help you stay in the driver’s seat as long as possible, if it’s what you want.

If you can’t find a solution or you simply want to hand back the car, you’ll need to consider what type of finance contract you have. Read on for a closer look at the different types of car finance available in the UK and which ones offer the option of returning the vehicle.

Personal Contract Purchase (PCP)

Can I give my car back to the finance company with a PCP loan? If you financed your car with a Personal Contract Purchase loan and you’ve already paid off at least 50% of the amount owing, you can hand it back to the lender. Keep in mind that this 50% figure also includes fees and interest. This option is known as voluntary termination and will be written into your PCP contract.

If you haven’t paid off 50% of the loan, you’ll need to top up the balance before you have the option to return the vehicle. Unfortunately, if you’ve paid off more than 50% of the loan you won’t receive a refund. Ideally, you should try to return your car as close to the 50% mark as possible to avoid unnecessary payments. Of course, damage that exceeds everyday wear and tear can result in additional charges. You’ll also need to meet any mileage terms and conditions you agreed to.

Hire Purchase (HP)

Hire Purchase contracts are very similar to PCP loans and usually make it relatively easy to return the vehicle, so long as you’ve paid at least 50% of the amount owing. Under UK law, HP contracts are also eligible for voluntary termination which keeps your options open. It’s part of the Consumer Credit Act 1974, Section 99, which clearly states:

“At any time before the final payment by the debtor under a regulated hire-purchase or regulated conditional sale agreement falls due, the debtor shall be entitled to terminate the agreement by giving notice to any person entitled or authorised to receive the sums payable under the agreement.”

While it’s likely voluntary termination will appear on your credit history, it won’t affect your score as long as you meet the 50% repayment requirement and don’t default on any additional fees or charges.

Want to know more? Don’t miss our complete guide to voluntary termination for car finance where we dive into this option in more detail.

Personal Contract Hire (PCH)

If you’ve purchased a car on a PCH loan the process of returning the vehicle can be a little more complicated. Most lenders will ask you to pay off the remaining balance in full, which can make for an expensive lump sum. So, can I give my car back to the finance company with a PCH loan? Yes, however, you may be in for some hefty fees. It’s best to contact your finance company directly and discuss solutions like deferring payments or extending the period of the loan before opting to return the vehicle.

Need to return your car?

Whether you want to know more about solutions like deferring your payments or have made up your mind and are ready to get the ball rolling on cancelling your car loan contract ASAP, My Car Credit is here to help. If you have a finance deal with us, you can call us on 01246 458 810 or email enquiries@mycarcredit.co.uk for any queries.

Or, perhaps you’re in the process of researching car loans and simply want to know more about your options when it comes to returning financed cars. If this is the case, our car loan affordability calculator is a great resource to help you decide what you can afford.

Representative APR 8.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 8.9%, annual interest rate (fixed) 8.86%, 47 monthly payments of £184.94 followed by 1 payment of £194.94 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,387.12, total amount payable is £8,887.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!