While car finance is a popular method to fund your car, circumstances can change and you may be wondering 'Can you get out of car finance early?' The good news is that yes, you can.
We are here to help every step of the way so if you are looking to get out of a deal early or worried about outstanding finance, we will be happy help with any questions you may have.
There are several reasons why cancelling your car finance agreement early could be necessary. These can include:
Your car finance agreement will come with a 14-day cooling-off period. This means you have a legal right to withdraw from the arrangement or cancel it within the first 14 days of signing the contract.
If you change your mind about the car finance you have chosen with 2 weeks, contact the lender direct who will then be able to cancel the agreement.
If the lender has already paid the money into your account, you’ll need to return this in full and the lender must then give you 30 days to make the repayment.
If you choose to cancel your car finance agreement after the 14-day cooling-off period you will essentially have to pay off the agreement early.
Hire purchase (HP) car finance and personal loans may charge a fee for early repayment, but you should save on interest when paying off the agreement early.
Paying of a Personal contract purchase (PCP) early can be a little more complicated as with this finance type you make fixed payments on the depreciation value of the car. This means the remaining balance left to pay could be more than what the car is actually worth. This is known as negative equity.
If you cancel your finance in this situation, it’s likely that your lender will ask you for additional payments, to make up the difference between what’s owed and the car’s value.
If you want to cancel any agreement after the cooling-off period, you’ll need to ask the lender for an ‘early settlement figure’. This will be the total amount you’ll need to pay to clear the finance agreement in full including any interest or fees. Once you have received the amount you owe, you will have 28 days to make the repayment.
If you don’t pay the settlement within 28 days, your credit agreement will carry on as normal.