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Can I get out of a PCP agreement?

Borrowing | Hire Purchase Helpful? 4

Asked by Patbiggins, submitted 21 July 2010.

Open Quote I have an HP agreement for my car over 4 years with a balloon payment at the end, I have not missed a payment in three and a half years and I would now like to hand the car back but the HP company told me I have to wait untill the end of the 4 years, is this correct? And is there a way round it if so?End Quote

Answered by Justin on 22 July 2010

Provided the hire purchase/personal contract purchase (PCP) agreement is under £25,000 then you should be covered by the Consumer Credit Act which means you can give back the car at any time provided you make good any missed payments (not an issue in your case) and bring your payments up to half the total amount payable on the agreement. The car will have to be in good condition, as specified by the terms of your agreement, else you might have to pay a penalty.

However, if you’ve already paid more than half the total agreement costs you won’t get a refund, so be careful you don’t lose out by taking this route.

If the agreement is for £25,000 or more you won’t be covered by the Consumer Credit Act, so your only option to exit early is likely to be paying off the loan in full, if the lender allows this. You could then recoup some money by selling the car. This is a lot more hassle and may leave you out of pocket, especially if the lender imposes a stiff penalty for early redemption, but it would allow you to end the agreement.

I’d suggest checking your PCP agreement for an early termination clause which should confirm which of the above options are available to you.

Hope things works out ok.

Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if necessary, use a qualified professional adviser.

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