Taking a financed car abroad
Taking a car on hire purchase or PCP finance abroad is possible in most cases, but there are steps to take before you go. The lender owns the vehicle until the agreement ends, which means taking it out of the country without permission or without the right insurance in place can put you in breach of your agreement. This guide covers what you need to arrange, what documents to carry, and what the rules are if you are thinking about moving abroad rather than just travelling.
Yes, in most cases. Under a hire purchase agreement the lender owns the vehicle, and most finance agreements include terms that restrict taking the car abroad without prior written permission. The restriction is there to protect the lender's interest in the asset. If the car is taken overseas and something happens to it, recovering it or enforcing the agreement becomes considerably more complicated.
The good news is that most lenders will grant permission for a standard holiday or short trip, particularly to European countries. The process is usually straightforward: contact your lender before you travel, explain where you are going and for how long, and request written permission. Some lenders issue a letter confirming approval, which you should carry with you.
AutoMoney Trust customers should contact us in advance of any trip abroad. You can reach the team through the existing customers page.
Your standard UK comprehensive policy may extend to cover you in Europe, but the level of cover it provides can vary significantly between insurers. Some policies automatically provide the same comprehensive cover in Europe as in the UK. Others automatically downgrade to third party only cover when driving abroad, which means damage to your own vehicle or theft abroad would not be covered.
Before you travel, contact your insurer and confirm:
A Green Card is an internationally recognised proof of motor insurance. Since the UK left the EU, some European countries require UK drivers to carry one. Check the FCDO travel advice for each country you plan to visit for current requirements, as these can change.
Your finance agreement also has insurance requirements that apply at all times, including abroad. See: You'll need comprehensive insurance.
When driving a financed car abroad, carry the following:
Some lenders hold the V5C logbook for vehicles on HP. If yours does, ask whether they can provide a letter confirming you are the registered keeper and have permission to drive the vehicle abroad. Most lenders will do this as part of the permission approval process.
Your standard UK breakdown cover is unlikely to include Europe as standard. Check your policy and, if it does not include European cover, arrange it separately before you travel. Breaking down in a foreign country without appropriate cover can be very expensive.
If you are involved in an accident abroad, the same principle applies as at home: your finance agreement continues and monthly repayments must continue regardless of what happens to the vehicle overseas. If the car is written off abroad, the insurance claim process works in the same way as it would in the UK, with the payout going first to settle the outstanding finance.
For more on what happens to the finance if a car is written off, see our guide on what to do if your financed car is stolen, which covers the insurance payout and shortfall process in detail.
Beyond the finance and insurance considerations, there are practical legal requirements for driving in several European countries that apply to any UK driver:
Check the FCDO and AA travel guidance for specific requirements in each country before you travel. Getting stopped abroad without required equipment can result in on-the-spot fines.
Temporarily taking a financed car abroad for a holiday is very different from moving abroad permanently. If you are relocating overseas and want to take a UK-financed vehicle with you, most lenders will not grant permission for this. The finance agreement is a UK contract, your credit file is UK-based, and enforcing the agreement if you are living in another country is significantly more complicated for the lender.
If you are moving abroad and have an outstanding finance agreement, the most straightforward options are:
For more on the selling and settlement process, see our guide on selling a financed car, which covers settlement figures, negative equity, and how to handle the transaction properly.
For more on voluntary termination, see the FAQ: Can I end my car finance through voluntary termination?.
This depends entirely on your lender's terms. Most will grant permission for standard holiday periods, typically up to 30 to 90 days depending on the lender. Some will allow longer periods with additional documentation. Anything approaching a permanent relocation will usually be declined.
Always get the permitted duration confirmed in writing before you travel. If you need to extend your stay unexpectedly, contact your lender as soon as possible rather than simply staying longer than the agreed period without letting them know.
Yes, if you finance your car with AutoMoney Trust, you'll need to maintain fully comprehensive insurance for the entire duration of your hire purchase agreement. This is because the vehicle remains the property of AutoMoney Trust until you've made your final repayment and ownership transfers to you.
Comprehensive car insurance provides protection against a range of situations, including accidental damage, theft, fire and third-party claims. Keeping the vehicle insured for the full duration of your agreement helps protect both you and the lender by ensuring the car remains covered throughout the finance term.
When budgeting for a financed car, it is important to consider insurance as part of your overall running costs. Fully comprehensive cover is often more expensive than third party or third party fire and theft insurance, so make sure you include this alongside your monthly finance payments, fuel, servicing, and other vehicle expenses.
Some drivers choose to consider GAP insurance, which can help cover the difference between your insurer's settlement value if the vehicle is written off and the remaining balance on your car finance agreement when the outstanding balance may be higher than the vehicle's market value.
With an AutoMoney Trust hire purchase agreement, legal ownership of the car transfers to you only after you have made all of your monthly payments and paid the £10 option to purchase fee at the end of the agreement. Until then, the vehicle remains the property of AutoMoney Trust.
Although you won't legally own the car during the finance term, you are responsible for its day-to-day running costs, including vehicle tax, insurance, MOT, servicing, and maintenance. As the finance provider owns the vehicle until the agreement is complete, you cannot normally sell, transfer ownership of, or make significant modifications to the car without our permission.
It is also important to keep up with your car finance payments, as missed payments could lead to arrears and, in some circumstances, the vehicle may be at risk of repossession if the agreement is not brought back up to date.
Once you have made your final monthly payment and paid the option to purchase fee, legal ownership transfers to you, and the car becomes fully yours with no further finance obligations.
Yes, you may be eligible for voluntary termination of car finance if you've paid at least 50% of the total amount payable under your hire purchase agreement. Under section 99 of the Consumer Credit Act 1974, customers have a legal right to voluntarily terminate your hire purchase agreement, provided the required conditions are met.
Voluntary termination (VT) of car finance allows you to return the vehicle and end your hire purchase agreement without making the remaining monthly payments. If you've paid less than 50% of the total amount payable, you may still be able to request voluntary termination, but you'll need to pay the difference before the agreement can be ended.
The vehicle must also be returned in reasonable condition, and any outstanding arrears or missed payments will need to be cleared before the agreement can be concluded.
Choosing voluntary termination on a hire purchase agreement may be recorded on your credit file and could be considered by future lenders when assessing applications. Before deciding whether this is the right option for your circumstances, we recommend speaking to AutoMoney Trust. Our team can explain the process, discuss any alternatives and help you understand the potential impact on your finance agreement.
Car finance can affect your credit score positively or negatively depending on how you manage your agreement. Making regular, on-time payments can help build a positive credit history and demonstrate responsible borrowing, while late or missed payments can negatively affect your credit score and make it more difficult or expensive to access credit in the future.
If payments are not made on time, they may be reported to credit reference agencies, which can lower your credit score and make future borrowing more difficult or potentially more expensive.
When you apply for car finance, a lender may carry out a hard credit search, which appears on your credit file and can cause a small, temporary change to your credit score. This is a normal part of the application process and helps lenders assess whether finance is affordable and suitable for you.
For more information about how applications are assessed, read our guide on Credit Checks for Car Finance.
