Can I Return A Car On Finance? A Comprehensive Guide

Among all the things you should learn in Car On Finance, the first is: Can I return a car to finance? Therefore, this guide should give you all the essential information: circumstances when it is possible, possible consequences for your budget, and other ways to address the current situation. Regardless of the reason why you consider it, whether you can pay for the car or think it was a bad investment, you need to know what can be done. Let’s dive into the article to know more: 

Understanding Agreements On Car Finance

So, before exploring any of the Car On Finance alternatives, you should have a clear understanding of the basic workings of a car finance agreement. Rather than just a bunch of papers, this is a legally binding agreement that establishes the lawfulness of borrowing money to purchase a car.

  • Personal Loan: You borrow money from a bank or another organization to fund the car.
  • Hire Purchase: A down payment is usually followed by monthly installments for a specified period. Ownership of the car is given to you after the final payment.
  • Personal Contract Purchase: It is similar to a hire purchase except for the following: You can own the car with a final payment ‘balloon.’
  • Lease or Personal Contract Hire: You will lease or hire the car for an agreed-upon number of months and return it at the end of that specified time.
  • Interest Rates and APR: APR and interest rates are crucial. The annual percentage rate tells you how much it will cost to borrow the funds. It includes all pre-paid fees and behaves similarly to the interest rate. Lower APRs indicate that you favor Vinci’s terms over the less expensive ones.
  • Deposit and monthly installments: the amount is determined by the loan amount, term, and interest rate. Ensure these are affordable deposits. The term is the length of the agreement, lasting between 12-60. Longer terms result in pricey but affordable monthly repayments
  • Term length: the length of time of the finance agreement should range between 12-60 months
  • Balloon payment: if you choose to go the PCP way, there will be a significant fee to pay if you intend to own the car outright at the end of the term
  • Mileage limits and condition: Annual mileage limits on the lease: violating the limit might attract penalties, and the car must return in good condition, or you will be charged for the damages you cause
  • Prepayment rights and prepayment penalties: You need to be aware of the ability to terminate the contract if you can prepay any amount earlier or if there will be sanctions in this case.
  • GAP insurance covers the difference between the payout and what you owe if the car is stolen or written off. It is optional, but it is highly recommended.

Can I Return A Car On Finance?

Can I Return a Car on Finance? Is it possible to return a financed car? The answer could be more straightforward and hinges on your contract’s specifics and reasons for returning it.

  • A Different Angle: Voluntary Termination

With HP and PCP contracts, you can voluntarily end the agreement. You can return the car after covering at least half the owed amount. This option is appealing if the payments are unmanageable, but remember, the vehicle must be in good condition and not exceed set mileage limits.

  • Early Settlement

Another path is to pay off the entire outstanding balance, along with any additional fees. This early settlement can be pricier, but it liberates you from the agreement, allowing you to either return the vehicle or sell it yourself.

  • Returning the Car

For leases, negotiating an early return with your lender might work. This route often involves hefty fees to compensate for depreciation and the lender’s lost profits, but it could be worth considering if you cannot continue with the payments.

The 14-Day Cooling Off Period

Fortunately, you have minimal time to decide to make a guilt-free return. Most financing contracts have set aside a 14-Day “cooling-off period,” which is regulated. It runs from the day you signed the finance agreement, not the day you received the car. During the 14 days, you can cancel the deal and return the car to the same condition you received. There might be some minor administration costs. However, you generally receive your down payment, and the agreement shall be dissolved. It is essential to your safety; take advantage of it if you make a mistake.

Beyond 14-Days

After the initial cooling-off period, returning your car becomes trickier. Here are the primary scenarios to weigh:

  • Voluntary Termination: You might negotiate with your finance company to take the car back, although it’s still being determined. If you’ve paid off a significant portion of the loan, your chances might be better, but expect some conditions.
  • Negative Equity: If your car’s market value is less than you owe, you’re in “negative equity.” You might have to pay the difference if your finance company is to consider taking the car back.
  • Early Termination Fees: Exiting your loan early could incur fees to compensate for the interest the finance company will miss out on.
  • Credit Rating Impact: Voluntarily surrendering your car can harm your credit score, albeit less so than if it were repossessed against your will.
  • Trading In: A dealership might take your financed car as a trade-in for a new vehicle, handling the payoff and possibly rolling any remaining balance into a new loan. This depends significantly on your car’s value and your negotiation skills.
  • Selling Privately: If you believe in your ability to sell, privately selling your car to pay off the loan is an option, though it can be challenging and time-consuming.

Alternatives To Returning Your Financed Car

Wondering if you can return a financed car due to financial troubles? There are alternatives to consider that might better suit your situation:

  • Refinancing or Bankruptcy: Well, perhaps you’ll be able to get a brand new loan with improved terms and a longer period than that which you currently have with your current auto. Or you may be able to sell your car for more than you owe on the loan and maybe even earn a little extra.
  • Payment Plans: Some creditors will be open to more examples of hardship support, such as deferral of payments or altered loans that give the time you need.

These options offer a way to manage your finances without having to return your financed vehicle.


The question “Can I return a car on finance?” has no direct answer. It depends on the terms of your finance agreement, your financial situation, and the reason that causes you to return the car. There are legal ways to deal with this issue, including being unable to make payments or being dissatisfied with the purchase. 

However, these options involve various financial risks and challenges. It is wise to be extremely cautious with this type of decision. First and foremost, educate yourself about your contracts and maintain a clear and immediate level of communication with your lender. Try other alternative options and, ideally, consult specialists to help you navigate this challenging situation.

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