Car finance can be done in two ways; when you either get a loan from a bank or a finance company, which is known as direct lending, or you go to a car dealership itself and enter a contract to lease the car and pay them back bit by bit, which is known as dealership financing.
There are several ways you can end your car finance contract. For starters, after you enter into a car financing contract, under the Consumer Credit Act, there is a duration of 14 days, which is known as the “cooling off period”. During the cooling off period, you can talk to your finance provider and end the contract. If you’ve already made a deposit, which you probably will have done, the dealer is not obligated to return your deposit back to you, although you may still ask.
If you’ve paid the company back fifty percent of the finance amount, including interest, then you can cancel the car finance and return the car back by a Voluntary Termination Agreement. It is important to note here that if you’ve paid the company back more than fifty percent already, you will not be refunded.
However, if you still haven’t paid fifty percent of the finance amount, you can cancel the finance by paying the difference. This means if the total amount is £6000 and you’ve paid £2000, then you can pay the remaining £1000 all at once. By doing so, you will have paid half of the finance amount and will be eligible to cancel the car finance. It is important to know here that if you have failed to take proper care of the car and it ends up with scratches and dents when you’re returning it, you will be obligated to pay for those.
If however, you wish to cancel the finance but still keep your car, you will have to pay a lump sum amount to settle the contract. This settlement amount is usually the entire remaining finance amount, including interest and fees, which you will have to pay at once in a single amount to end the contract.