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Can I Return a Car on Finance?

Posted on 11th January 2024
Can I Return a Car on Finance?

It happens often, we make a purchase and a while after, realise the product just isn’t for us. When this is an Amazon order, for example, it’s simple enough, you just return it, get your refund, and then make an alternative purchase. What about when it is something a little more costly and something that must be paid for in instalments? Something like a car for example? Well, in some instances, returning a car on finance is straightforward and you could treat it like the Amazon purchase we referenced earlier. In others though, there are specific rules to follow that could determine whether a return of a car on finance is even possible. For the most part, you will have a 14-day cooling-off period where you can return the car to the finance company before the contract gets going. However, after 14 days, things can be a little more complex.

Can I return my car to the finance company?

If you want to return your car to a car finance company you certainly can. You just need to make sure you do it within what is known as the “cooling-off” period. This is a 14-day period where you have the right to change your mind and end the finance contract before it has really got started. Should you have owned your car for longer, you can still return it but only when certain caveats are met. We will explain these a little later.

Sometimes, people opt to return their financed car due to no longer being able to afford it, but this can sometimes be detrimental, especially if the period of unaffordability is only temporary.

Can I return my car if I can’t afford it?

Returning your financed car if you can’t currently afford it should perhaps only be considered after you have spoken to your lender. For many of us, a car is a necessity and to give it up could prove more detrimental than you had first thought. If the costs of paying for your car each month are proving to be too expensive, but you know it is only a short-term problem, returning your car may not be the best option. You could instead speak to your lender about a car finance payment holiday. This way you get to keep your vehicle but have the payments adjusted to help you get your finances in order. They may also offer refinancing options that alter the agreement to be more affordable each month. This can be beneficial, but it can also cost more in the long term. They will be able to advise you on the best options to match your current circumstances. Just be aware that this can affect your credit score which could harm your future requests for a loan, a mortgage or other finance plan.

Can you return a car that’s on HP or PCP?

You can return your financed car, but it will depend on the type of finance used to purchase the vehicle. In most cases, you will have chosen HP (Hire Purchase) or PCP (Personal Contract Purchase).

With both HP and PCP, the car can be returned to the finance provider if 50% or more of the loan has been paid back. It is important to remember that this 50% is not 50% of the car value but 50% of the total loan amount including any interest and charges. You will often see this referred to as Voluntary Termination. If you decide to take Voluntary Termination and have paid back more than the required 50%, you are not entitled to receive any of the overpaid amount back.

If 50% has not been reached yet, and you still wish to return the vehicle, you will have to make the difference up before being able to do so.

If the vehicle is leased under a PCH (Personal Contract Hire) scheme, you can return the car but will likely have to pay back any outstanding money owed on the contract. This can prove costly, especially if there is a long time left of the agreement.

Regardless of the type of finance, you may also find additional fees are added should your vehicle be returned in poor condition or have exceeded the annual mileage limit set out in a lease agreement.

Can I return a car I purchased with a bank loan?

With car finance, you are borrowing the car until it is paid for. You never become the full legal owner until all the payments are completed on it. This means you cannot sell your car privately as you don’t have the right to do so. However, you could look to trade it in at a car dealership. The dealership will approach the financing company, agree on a settlement figure, and then factor this into a new finance agreement on a new vehicle for you.

Should you have financed your car via a bank loan though, things are a little different. The funds used to purchase the car will have come directly from the bank. You then use that sum to purchase the car outright meaning that you are now the legal owner. You can then sell the car if you no longer wish to use it or have been finding the monthly loan payments a little too expensive. Unlike with HP or PCP, there is no option to ask for a Voluntary Termination when using a personal loan for your car purchase.

What is voluntary surrender?

This is another term you may find yourself presented with if you are looking into returning your financed car. It is similar to the Voluntary Termination we mentioned earlier except it is not available to everyone. Voluntary Surrender is offered to those using car finance who are in serious financial difficulty and cannot make any more payments on the vehicle.

If you have not reached the 50% that allows you to return the car and do not have the funds to reach it, you could look for a voluntary surrender instead. In such a case, your car would be returned to the lender and then sold at auction. If the amount raised is more than what you owe, your contract is cancelled and there are no more payments to be made. If the amount raised at auction is not enough to cover the outstanding finance, you will still be required to pay any outstanding balance. This will appear on your credit score and will impede your future chances of obtaining finance in the future.



Returning a financed car isn’t too complicated but can only be done when you follow the specifics of your finance agreement. If you are looking for an affordable way to find a new vehicle, speak to Euphoria. Our team of car finance specialists are on hand to help you secure the car you want today! Acting as direct lenders, we assess each application carefully, taking into account your unique circumstances in order to find the perfect new or used car finance solution for you. What’s more, we don’t mind if you are an experienced driver, a driver looking for first car finance, or someone who has had previous financial difficulties and now needs car finance for a poor credit score. Every application is considered. Why not give us a call today and start driving your new car tomorrow.

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