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Last updated and reviewed - 5 October 2026
Voluntary Termination of Car Finance: What You Need to Know
Voluntary termination lets you end a regulated hire purchase agreement early and return the car. It also applies to PCP agreements structured as regulated hire purchase or conditional sale. You can use it before the final payment falls due, while the agreement is still in place. You do not have to wait until you have paid half, or show that your circumstances have changed. You may still owe money afterwards.
Your agreement shows the halfway figure: half the total payable, including interest and fees. Any deposit counts towards what you have paid. For PCP, the total includes the final balloon payment.
If you have paid less, there may be a shortfall to pay. Arrears and charges for failing to take reasonable care of the car may also remain payable. Ask for an itemised calculation so you can see what is included. Arrears must not be counted twice. You do not have to clear the balance before giving notice. If you have paid more than half, voluntary termination does not refund the extra payments.
Suppose your agreement shows a halfway figure of £6,000. You have paid £4,500 and have no arrears. The difference is £1,500. You can give notice before paying that difference, but you still owe it. This example assumes there are no other amounts due and you have taken reasonable care of the car.
With voluntary surrender, you agree to return the car and it is usually sold. The money raised is put towards what you owe, but a remaining balance and applicable costs may still be payable. It is a different process from voluntary termination. If you are unsure which route you want, ask for both options to be explained before agreeing to surrender.
Take dated photos, record the mileage and keep copies of the return paperwork. Normal wear from use should be considered in light of the car's age and mileage. A professional valet is not automatically required. If you are asked to pay for damage, ask for the inspection evidence and a breakdown of the charge.
Ask how the account will be reported to credit reference agencies. Missed payments are separate from exercising your termination right, and future lenders make their own decisions.
If your car is faulty, contact us about that problem before choosing how to end the agreement. Under HP, we are responsible for the quality of the car supplied. Repair, replacement or rejection rights depend on the circumstances.
Tell us clearly that you wish to exercise your voluntary termination right under section 99 of the Consumer Credit Act 1974. Giving notice in writing helps you keep a record. Ask us to explain the balance and arrange the return. Tell us if you cannot afford what remains to pay.
Contact our support team on 0800 197 9090, option 2, or email customer.support@automoneytrust.co.uk. You can also get free, independent debt advice from National Debtline or StepChange.
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, your car is likely to lose value during the finance agreement. Most cars depreciate over time, meaning they gradually lose value as they age. For most used cars, depreciation continues throughout a Hire Purchase agreement, so the vehicle is typically worth less at the end of the finance term than when it was purchased.
Depreciation is important because the total amount payable on a car finance agreement includes the amount borrowed, interest, and any applicable fees. As a result, the total amount you repay over the agreement may be higher than the vehicle's market value by the time your finance ends.
Depreciation can also increase the risk of negative equity. If you decide to settle your car finance early or sell the vehicle before your agreement has ended, the car's current market value may be lower than the outstanding finance balance. In this situation, you may need to pay the difference before the agreement can be settled.
The rate at which a car depreciates depends on several factors, including its age, mileage, condition, service history, brand, model, and market demand. Keeping your vehicle well maintained and within reasonable mileage can help preserve its value over time, although depreciation cannot be avoided completely.
Some drivers also choose to take out GAP insurance, which may help cover the difference between an insurer's payout if the vehicle is written off and the remaining balance on the car finance agreement. This can provide additional financial protection particularly during the earlier years of a hire purchase agreement, when the outstanding finance may be higher than the vehicle's market value. GAP insurance is optional and subject to policy exclusions and limits.
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.
A lender may carry out a hard credit search when you apply. Other lenders can see it on your credit report, and it may affect your score. Several hard searches close together may affect how lenders assess you.
For more information about how applications are assessed, read our guide on Credit Checks for Car Finance.
The length of your car finance agreement can have a significant impact on both your monthly payments and the total cost of borrowing.
Choosing a longer finance term, such as 60 or 84 months, spreads the cost of the vehicle over a greater number of payments. This can make your monthly payments more affordable, but it may mean you pay more interest overall throughout the agreement.
A shorter car finance term, such as 36 months, usually results in higher monthly payments because the balance is repaid over a shorter period. However, paying the agreement off sooner can reduce the overall amount of interest paid, making it a potentially lower-cost option over the full term.
When choosing the right finance term, it is important to consider your budget, monthly affordability, and how long you plan to keep the vehicle. The best option is one that allows you to comfortably manage your payments without putting unnecessary pressure on your finances.
AutoMoney Trust offers car finance terms from 36 to 84 months, giving you flexibility to choose an agreement that suits your circumstances. Use our car finance calculator to compare different term lengths and understand how your monthly payments and overall costs could change before applying.
