car finance agreement Archives

Can I Give My Car Back to the Finance Company?

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.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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!

or call 01246 458 810

Can You Modify a Car on HP Finance?

Hire purchase finance (HP) is an excellent way of buying a car when you don’t have the money to pay for it upfront. Not only is the vehicle yours once the final payment has been made, unlike PCP, but you’re more likely to get car finance with a poor credit rating using HP.

But once you’ve got the car, what can you do with it? In this post, we’ll discuss whether you can modify a car on HP finance.

What is HP finance?

HP finance is essentially a deal where you borrow the money to pay for your car. As a result, you aren’t the owner until the deal is completed. Instead, it is the finance company who owns the car, which means they have a considerable say on whether you modify the vehicle.

Once the last payment is processed and your name is on the V5, you can do whatever you want (as long as the alteration is road legal).

Is there any way to modify a car on HP finance?

Yes – but you need to ask for permission first. If you don’t, you may void the terms of your agreement, and the finance company is entitled to ask you to pay the remaining balance in full. Alternatively, they may take the car back and sell it at auction. Should the car make less at auction that you owe to the finance company, you could then be liable for the balance.

By contacting the lender, either via telephone, email, or letter, you will eliminate any nasty surprises down the line. Make sure you get confirmation in writing. That way, you can prove you didn’t nullify the terms and conditions of the deal.

What are considered modifications?

Considered modifications on a HP finance deal can be anything that impacts the value of the car, whether positively or negatively.

Even the smallest modifications can have an impact on your finance agreement, so be careful not to make changes that haven’t been agreed with the lender.

Modifications could include, but are not limited to:

Cosmetic changes to appearance, e.g., body kits, spoilers, paint, wraps, window tints, lights, wheels, etc.
Upgrades in performance, e.g., suspension, exhaust, engine, brakes, gearbox, etc.
Addition of towing equipment, e.g., towbar
Infotainment systems, e.g., software, screens, speakers, stereos, etc.

So, don’t take the risk – speak to the lender. And of course, if it’s simply the case that you’re ready for a car with even more specifications, My Car Credit can help you with calculating and arranging car finance on your next wheels.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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!

or call 01246 458 810

car finance agreement car modifications hire purchase hp finance modifications

Is there such a thing as guaranteed car finance?

Man signs agreement for buying car on finance

Put simply – no. Just as there are no guarantees in life, there are no guarantees in car finance. As such, we would advise you to be very wary of any company that suggests they can guarantee car finance to you. At My Car Credit, we don't offer any guarantees. However, we always do our absolute best to get you accepted for car finance, so you can buy the car that you want.

The truth about Car Finance & ‘guaranteed car finance’

The reality is that the ‘guaranteed car finance’ claim is often a marketing ploy. The goal is to make you think that you’ll definitely be able to get a loan regardless of your circumstances. If companies offer guaranteed car finance, they think they’ll attract more customers. And they usually do – often people with a poor credit rating.

In truth, guaranteed car finance simply doesn’t exist. In fact, there have been laws in place since 2010 which state that making a false or misleading claim around finance guarantees for consumer credit is an offence. Additionally, advertisements that contain just the phrase ‘loan guaranteed’ are also banned. The advert would need to include terms and conditions regarding the individual’s credit status to be allowed.

‘Guaranteed car finance’ schemes

Found a few companies that offer guaranteed car finance? Despite what we’ve said above, there are some providers offering what they call guaranteed car finance. Some finance companies will offer guaranteed car loans to reel in vulnerable customers, without any actual guarantee. Other lenders will create some sort of false guarantee and claim that it amounts to guaranteed car finance.

Whatever the case, watch out for ‘guaranteed car finance’ schemes which are designed to catch you out. A common scheme is to ask for a ‘guaranteed car finance enquiry’ fee. Usually this fee and the offer it is meant to guarantee are closely attached to complex small print (i.e. legal jargon). In order to decipher it, you’d need to be a qualified lawyer!

Any finance lender suspected of dealing with customers in this way can end up with a full Financial Conduct Authority (FCA) investigation into their conduct. If upheld, this could lead to them being fined or forced to close.

They’ll carry on for as long as they can get away with it. But when they get caught out, there’s rarely any compensation for customers with a bad credit history, who have been irresponsibly sold car finance – usually with sky-high monthly repayments. You’ll find that your personal circumstances are even worse, giving you less chance of improving a bad credit score.

In summary – almost every guaranteed car finance claim is a scam.

How car finance agreements really work

Car finance agreements are purely based on your individual circumstances and your credit profile. This means that there will inevitably be some individuals who aren’t eligible for car finance – hence why guaranteed car finance doesn’t make sense.

We’ll go out of our way to help you get approved for car finance, including bad credit car finance. However, it’s our lenders that have the final say on your car finance application after fully assessing your current financial situation, affordability and credit profile.

A credit profile is a document that contains information regarding your creditworthiness and credit history. Your credit profile includes: what types of credit you hold, the length of time your credit accounts have been open for, if you made your repayments on time, and any applications for new credit.

Lenders are far less likely to lend you money if they are not convinced you can repay them. This would naturally be bad business for them. In addition, it is not ethical for them to lend money that could push you into financial difficulties. So, it’s paramount they only offer car loans if they believe you can afford the monthly payments.

How to get accepted for car finance

Whilst we cannot offer guaranteed car finance, there are ways you can improve your chances of getting accepted for car finance for a new car, whatever your credit history.

Improve and maintain your credit score
Your credit score is the main factor that is assessed when you apply for a car loan. It reflects your ability to keep up with monthly repayments. This means it’s important you keep your score as high as possible. There are many things you can do to improve your credit score. Not only will a good credit score improve your chance of an acceptance but you will also get a better rate. However, don’t lose heart if you have a low credit sore as there are still plenty of options.
Put down a deposit on your car loan
Paying an upfront deposit on your car loan makes you less of a risk to the lender. For bad credit car finance, there may be a larger deposit required. Not only is the amount owed on the vehicle reduced but your monthly payments will also come down. Once again, don’t despair if you can’t pay a deposit. There are plenty of no deposit car finance options available!
Opt for a Guarantor Loan
A Guarantor Loan is where a third party (usually a family member or close friend) agrees to pay your loan if you are unable to. This lowers the risk for the lender, as it’s essentially guaranteed car finance on their end, improving your chances of acceptance. It can also lower the interest rates you are offered. Guarantor Loans are a big responsibility for both parties and shouldn’t be entered into lightly. Make sure you are clear on how a Guarantor Loan works before proceeding.

What we can offer

My Car Credit has access to a large panel of lenders. These have all been vetted and approved by the FCA for their trustworthy operations and the quality of their service.

Our large network of lenders increases the chances of you getting accepted, across all credit profiles (from poor to excellent). Our unique underwriting policy prioritises the best outcome for you, the customer. This ensures we give you the best available deal on car finance for your circumstances.

You can trust My Car Credit because we are part of Evolution Funding, the UK’s largest vehicle finance broker. We are proud to be award-winning market leaders in the industry. We have helped thousands of customers get the car they want; at the price they can afford. We are also regulated and monitored by the Financial Conduct Authority (FCA). In conclusion, you can borrow for your next car safe in the knowledge that we are professional and reputable.

What about bad credit car loans?

At My Car Credit, we understand that some applicants have a poor credit history. That’s why we don’t just turn down drivers because of a poor credit score. As a leading UK car finance company, we aim to offer car finance packages to as many people as we can.

Unlike traditional lenders, we have a network of over 30 companies. Our team will work tirelessly to compare your car finance options and find the right deal despite a bad credit score. Whatever your credit rating, our goal is to offer you a car finance agreement with monthly payments you can afford.

If you have any questions, our Car Credit specialists are here to help. Finally, you can get an instant decision, that won’t affect your credit file, by applying today.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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!

or call 01246 458 810

car finance agreement car finance eligibility credit score guaranteed car finance Jan24

6 Things to Check Before Signing a Car Finance Agreement

laptop and notepad being used to research the car finance agreement

Car finance agreements are an accessible way to own the motor of your dreams. As well as being easy to set up with the help of online car credit specialists, you don't need thousands of pounds saved to get on the road. That’s especially helpful in a post-COVID-19 world where money may be tight.

However, despite their benefits, it’s important to remain vigilant when signing an agreement. This will ensure you understand exactly how your car finance deal will work. To avoid unnecessary charges and stress, read the contract thoroughly and watch out for the following stipulations.

1. Mileage limit

From the get-go, the contract will outline a mileage limit, meaning you may have to restrict the amount you travel each year. If you exceed this, expect charges anywhere between 3p to 70p per mile.

Before committing to a cap, work out what a realistic mileage looks like for you and anticipate how it could change over time. Ask yourself how much you travel each year on average, how often you commute to work via car and whether you’re planning to switch jobs or move house.

Ideally, allow for all possibilities by choosing a contract that provides more mileage than you’re expecting to do, even if this means paying a small additional fee upfront.

2. Service requirements

Some car finance agreements ask you to service the car on set dates at specific dealerships alongside general car maintenance. If the contract is unclear, ask your lender exactly what they expect from you and put any dates in your diary as soon as possible.

3. Damage charges

Most lenders allow for reasonable wear and tear, but the definition of “reasonable” varies. For peace of mind, make sure you’re on the same page when it comes to damage – what’s passable, what’s chargeable and how much will those charges be?

4. Payment schedule

Prepare to meet monthly repayments by double-checking the payment plan and, if possible, negotiating an arrangement that suits your income stream. Can you arrange a fixed repayment rate with your lender? If necessary, could you adjust your payment dates further down the line?

Try to get these details settled before signing the contract. It’s much harder to do so once the agreement is active.

5. Late payment policy

While lenders are sympathetic towards a change in circumstance, there are still penalties for missing repayments. It’s best to find out what these are so you can factor them into your final decision.

6. Insurance policies

Some agreements sound too good to be true, offering insurance policies that appear to be free. If you come across this, scrutinise the terms and conditions as it’s more likely you’ll be asked to cover the insurance as part of your monthly repayments.

Do you need help finding a fair car finance agreement?

That’s where My Car Credit comes in. We’re experts in securing the most preferable market rates for car financing through our panel of lenders – the largest panel out of any UK broker.

To learn more, call us on 01246 458 810 or drop us an email at enquiries@mycarcredit.co.uk – one of our specialists will get back to you as soon as possible.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

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Is There a Maximum Age Limit for Car Finance?

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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!

or call 01246 458 810

car finance agreement

Is there a cooling off period when you sign up for car finance?

Vehicle skids around during cooling off period

Be honest with yourself, at some point you’ve judged somebody by the car that they drive. We know you shouldn’t judge a book by its cover but sometimes it’s far too fun! So, here’s some of the car brands and stereotypes people have about them.*

Whether you have rushed into your agreement or you’ve found a better deal elsewhere, you should be able to cancel your car finance agreement for up to 14 days after you signed on the dotted line. This two-week period is known as a ‘cooling off period’.

Cooling off periods

Under the Consumer Credit Act, you should have 14 days to withdraw from a credit or loan agreement. This is applicable to all finance agreements, regardless of whether you made it in person with the lender, over the phone or on via an internet process.

The 14-day period begins on the day you sign/agree to the contract, when you receive a copy of the agreement or from when you get a notification from your bank records that you have received the loan.
This applies to any Hire Purchase, Personal Loan or Personal Contract Purchase that amounts to below £25,000. Any higher amount will be susceptible to the terms and conditions of the agreement and/or the lender’s decision. In addition, the right to withdraw does not apply to any loan above £60,260.

How to cancel a loan agreement

You will have to provide a notice of your withdrawal either in writing or verbally. Most often you will have to repay any interest that has occurred between taking out the loan and repayment.
The deposit you can pay to secure some car finance deals will often be kept by the car finance lender. It is possible to get this back under special circumstances (i.e. if there has been unlawful conduct or you have signed the contract away from the premises) but it is highly unlikely.

Returning the car

Whilst you can cancel a car finance agreement, you will not always be able to return the car and receive your money back. If you have bought your car on the premises of a car dealership and signed a vehicle form at that location, you must pay for the car in full within 14 days, or within the specified time limit agreed in your contract via an alternative finance option. This is because a vehicle order form is a binding contract.

There are two exceptions to this rule: if you bought off-premises (i.e. via the phone or internet) and you did not sign a vehicle order form from the dealership, or if the car is not as specified in the contract (i.e. it’s different in specification or it is faulty).

We know that sometimes rash decisions can be made and you can jump into a car finance agreement without taking enough consideration. This is one of the main reasons that a ‘cooling period’ was created. However, it’s always important to know exactly what your options are in the event that you need to cancel a finance agreement. We hope this has given you more understanding of those options, for more information visit the GOV website here.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

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Loan amount

£

Repayment term

My credit rating

X monthly repayments of
^£X

Typical rate

Loan amount

Total payable

X% APR*

£X

*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

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!

or call 01246 458 810

car finance agreement consumer rights cooling off period

Common scenarios where motorists return cars

What to do when car finance isn’t working out

Need to return your car?

Rates from 9.9% APR. Representative APR 12.4%

Related articles

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Require more help?

What is HP finance?

Is there any way to modify a car on HP finance?

What are considered modifications?

Rates from 9.9% APR. Representative APR 12.4%

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Require more help?

The truth about Car Finance & ‘guaranteed car finance’

‘Guaranteed car finance’ schemes

How car finance agreements really work

How to get accepted for car finance

What we can offer

What about bad credit car loans?

Rates from 9.9% APR. Representative APR 12.4%

Related articles

Excellent

Good

Fair

Poor

Bad

Require more help?

Car finance agreements are an accessible way to own the motor of your dreams. As well as being easy to set up with the help of online car credit specialists, you don't need thousands of pounds saved to get on the road. That’s especially helpful in a post-COVID-19 world where money may be tight.

1. Mileage limit

2. Service requirements

3. Damage charges

4. Payment schedule

5. Late payment policy

6. Insurance policies

Do you need help finding a fair car finance agreement?

Rates from 9.9% APR. Representative APR 12.4%

Related articles

Excellent

Good

Fair

Poor

Bad

Require more help?

Be honest with yourself, at some point you’ve judged somebody by the car that they drive. We know you shouldn’t judge a book by its cover but sometimes it’s far too fun! So, here’s some of the car brands and stereotypes people have about them.*

Cooling off periods

How to cancel a loan agreement

Returning the car

Rates from 9.9% APR. Representative APR 12.4%

Related articles

Excellent

Good

Fair

Poor

Bad

Require more help?