How to Get Out Of Your Car Finance Plan

Lorem ipsum dolor sit amet news article image



It’s finally here! The new 72 plate registration plate was released on the 1st September 2022, and will feature on all brand new cars registered from September onwards, until March 2023.

The new reg plate has changed more than the number this year, as well as the new ‘72’ on the plate, new cars registered from September 2022, have to include:

  • The vehicle supplier’s business name and postcode
  • The reg manufacturer’s name

How To Get Out Of Your Car Finance Agreement

If you are interested in upgrading your car to the new ‘72’ reg plate but your car is on finance, we can get you out of your finance plan, allowing you to upgrade. What you need to do to get the upgrade you are looking for depends on the type of finance plan you are on.

Personal Contract Purchase (PCP)

Usually, your PCP plan can be voluntarily terminated, providing that you have paid a minimum of 50% of your total finance plan. This includes any interests, fees and the balloon payment. By paying off 50% of your finance plan should allow you to hand your car back over to the lender.

If you are voluntarily terminating your PCP plan, these are the key things to remember:

  • Voluntary termination is a good option if you are struggling to keep up with the monthly finance payments.
  • You MUST have paid 50% of the Total Amount Payable (the full contract)
  • If you have paid off more than 50%, you will not receive a refund.
  • Usually, you will need to give your finance company notice that you are voluntarily terminating your agreement in writing.
  • If your car is damaged beyond the Fair Wear and Tear guidelines, you will have to pay for the repairs.
  • If you have gone over the mileage agreement, you’ll need to pay an excess-mileage charge.

If you have not paid off the 50% of your finance agreement, you can settle the agreement early. Early settlement is a great option if you can pay off the remaining balance or if the trade-in value is higher than the settlement figure. This can happen at any time of your agreement but you will have to pay any admin fees and the final balloon payment.


Hire Purchase (HP)

If you are on a Hire Purchase finance plan, cancelling your plan works in the same way to PCP. Because HP doesn’t have a balloon payment at the end, you will reach the 50% mark exactly halfway through your agreed plan.

If you are cancelling your plan before paying off the 50%, then an early settlement is an option. It works in the same way as PCP however, it’s often cheaper because there is no balloon payment.

Although this can be cheaper, it’s not necessarily the best option for people who would struggle to pay off the remaining balance in one last payment. This means that if you had paid £10,000 and the total agreed deal was £50,000, you would be required to pay the remaining £15,000 on the agreement to cover the 50%.


Lease Purchase (LP)

To end your Lease Purchase agreement early, you will need to pay what is left on your agreement. If you decide to cancel the agreement 12 month into a 24 month lease, you will need to make up the payments for the last 12 months.

When you are returning a car that you brought on a lease agreement, there may be some additional charges on top. These charges include:

  • An early termination fee
  • Any cost to get the vehicle for resale
  • Transport and storage of the car
  • Any taxes
  • Any negative equity 

These extra payments can add up quite quickly. However, there are a few ways that minimise these payments and save you a bit of money. One option is to buy the car outright and sell it on. However, your leasing company will have to agree to this first.

It’s also possible to transfer your lease onto someone else. Websites such as Swap-A-Lease will swap your lease to someone else and work in the same way as selling your car. Usually, this comes with a fee, However, this often works out cheaper than going through all the additional charges of cancelling your lease agreement.

Before doing this, make sure that this is allowed in the terms of your agreement.

And there you have it, how to get out of your finance agreement depending on your finance type. To sell your car through us or for a free car valuation enter your details on our website for an easy, no obligation quote. For more tips and advice, check out our blog or give us a follow on Instagram and Facebook.