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Car finance ›
Can you give your car back to the finance company?
Updated: Monday, 15 May 2023
Are you having trouble keeping up with the repayments on your car finance? Have your personal circumstances changed, and you just don’t need your car anymore? Then you’re probably wondering whether you can give your vehicle back to the finance company.
Whether or not you are able to give your car back depends on the terms of the finance agreement and there are some things you need to consider before taking this step.
We’ll look at everything you need to know about handing back a financed car and what you should consider before doing so.
Why return your vehicle to the finance company?
There are many reasons why you might decide to hand your car back to your finance company. A car finance agreement lasts for several years, and it’s understandable that your personal circumstances might change during that time.
It may be that your financial situation is very different to what it was when you took out the finance agreement. This is usually the main reason that people give their cars back. When your financial circumstances change for the worse, it can be hard to keep up with your monthly payments.
There could be many different explanations for this change. You may have recently switched jobs, bought a house, or had a baby. All these things could make your monthly repayments unmanageable.
Changing personal circumstances is another common reason for returning a car to the finance provider.
Let’s say you bought a Volkswagen Polo on finance. At the time, it was the perfect size. But now you have a growing family, and the Polo isn’t quite big enough for the whole family. So, you might want to return the car and upgrade to something bigger.
There are plenty of options available to you if you want to change your car. Depending on the circumstances you may be able to change your car on finance or make additional payments on your car finance to end your agreement more quickly.
What should you do if you can’t afford your car finance repayments?
If you’re struggling to afford your monthly repayments, it doesn’t necessarily mean you need to return your car. You should speak to your car finance provider first. Be honest about your situation and tell them why you’re finding it hard to pay.
You should do this as soon as you realise you might not be able to make a repayment. If you default on your payments, you may incur extra fees. Your credit rating may also be negatively affected.
If you’re finding it difficult to make your repayments, you could be entitled to some ‘Breathing Space’ – a Government Debt Respite Scheme.
If you need some time to seek advice or come up with a repayment plan, help is available. Contact your lender to discuss the options available to you.
If you’re a Moneybarn customer and finding it difficult to keep up with repayments, you can contact us, and we will be happy to discuss your options.
We are unable to give debt advice, however there are lots of helpful organisations who can. These include:
- StepChange, who offer a freephone debt advice service
- MoneyHelper, who have a range of free money tools and information
Can I give my car back to the finance company?
If you still think that handing your car back is your preferred option, you’ll need to pay close attention to the type of finance you have.
Some of the most popular types of car finance agreements in the UK are Personal Contract Hire (PCH), Hire Purchase (HP), Personal Contract Purchase (PCP) and Conditional Sale (CS). You can also take out a personal loan to finance a vehicle.
Each type of agreement has different terms for handing the car back, so check the details of your contract. Every car finance agreement is different and your contract will explain the terms of your agreement. Or, if you’re not sure, contact your lender.
To learn more about the different car finance options, discover our guide explaining the different types of car finance. Or keep reading and we’ll explain if you could hand back your car for the most common types of finance.
Can you hand back your car on a Conditional Sale (CS)?
At Moneybarn, we use a Conditional Sale agreement for car finance, which means you will only legally own your vehicle once you’ve made your final repayment. While you are in the agreement, you will be the registered keeper so will be responsible for maintaining and looking after the vehicle.
If you want to end your Conditional Sale agreement early by voluntary termination, you’re liable for 50% of the total amount payable that was agreed at the start of the agreement, and any arrears or charges where appropriate.
When you voluntarily terminate your contract, you’ll need to hand the vehicle back to us in good condition.
If you’re a Moneybarn customer and would like to discuss if this is an option for you, contact us and we can help.
Can you hand back your car on PCH (Personal Contract Hire)?
If you have a Personal Contract Hire plan, you should be able to hand the car back to the finance company whenever you please. However, there is likely to be an early hand-back fee.
The leasing company will usually calculate the fee and ask you to pay it. When you hand the car back, it’ll need to be in good condition and within its pro-rata mileage limits. There might be other requirements depending on your agreement. If you’re unsure, check your contract or contact your lender.
If you pay the early exit fee and meet these other conditions, you shouldn’t have any issues returning the car. Your credit rating also shouldn’t be affected.
Can you hand back your car on HP (Hire Purchase)?
You can end a Hire Purchase (HP) agreement early through voluntary termination. This means repaying half of the total amount payable, plus any arrears or charges if applicable.
If you haven’t repaid 50% of the total amount payable, you could pay the remainder to reach this point. This amount can be found in your contract.
Can you hand back your car on PCP (Personal Contract Purchase)?
With a PCP agreement, you can hand the car back early if you’ve paid off 50% of the total amount payable, as set out in your contract.
If you’re unsure, check your contract or ask your lender.
You also need to make sure your car is in good condition and within its mileage limits when you hand it back. If not, you might be charged extra according to your contract.
Can you hand your car back with a personal loan?
A personal loan is a lump sum of money you are given, that is repaid usually monthly over a set period. It usually won’t be tied to the car so handing the vehicle back to a lender isn’t appropriate as it isn’t a part of the loan agreement.
As you would be the legal owner of the car, if you decide you don’t want it anymore, you can sell or trade it in as you see fit. You could then use this money to pay back the loan or get a different car.
What is voluntary termination?
If you choose to end your agreement early, you’ll be voluntarily terminating your contract. So, what does this mean, and how does it affect you?
‘Voluntary termination‘ is a term that originates from Section 99 of the Consumer Credit Act, 1974. A car finance customer has the legal right to cancel an agreement early by voluntarily terminating the agreement.
Voluntary termination requires you to inform your lender, in writing, that you intend to terminate the finance deal early. You would be liable for half of the agreed finance amount, plus any arrears or charges if appropriate.
If you are a Moneybarn customer and are thinking about voluntarily terminating your agreement, please contact us and we can discuss your options.
FAQs about returning your car to the finance company
Can I transfer my car finance agreement to someone else?
Everyone has different personal circumstances, which is why every car finance agreement is different.
For this reason, most lenders will not allow you to transfer your car finance to another person, or take out two cars on finance. Nor could you finance a car for someone else.
Do I own my car if it's on finance?
It depends on the type of finance you have.
With HP, PCP and CS, you are the registered keeper for the time of your agreement. This means you do not fully legally own the car so there might be restrictions on modifying or selling the car, as we explained earlier.
In these types of finance, you do not legally own the car until you have fully paid the finance.
With a personal loan you legally own the vehicle, as the loan isn’t tied to the vehicle itself. Rather, the bank has given you a lump sum with which you decided to buy a car. So in that case, you are the full owner.
Can I sell my car before I've paid off the finance?
No. You’re not the car’s legal owner, so it’s not yours to sell. You need to wait until you’ve paid your full outstanding balance before you can sell the vehicle.
Are you having trouble keeping up with the repayments on your car finance? Have your personal circumstances changed, and you just don’t need your car anymore? Then you’re probably wondering whether you can give your vehicle back to the finance company.
Whether or not you are able to give your car back depends on the terms of the finance agreement and there are some things you need to consider before taking this step.
We’ll look at everything you need to know about handing back a financed car and what you should consider before doing so.
Why return your vehicle to the finance company?
There are many reasons why you might decide to hand your car back to your finance company. A car finance agreement lasts for several years, and it’s understandable that your personal circumstances might change during that time.
It may be that your financial situation is very different to what it was when you took out the finance agreement. This is usually the main reason that people give their cars back. When your financial circumstances change for the worse, it can be hard to keep up with your monthly payments.
There could be many different explanations for this change. You may have recently switched jobs, bought a house, or had a baby. All these things could make your monthly repayments unmanageable.
Changing personal circumstances is another common reason for returning a car to the finance provider.
Let’s say you bought a Volkswagen Polo on finance. At the time, it was the perfect size. But now you have a growing family, and the Polo isn’t quite big enough for the whole family. So, you might want to return the car and upgrade to something bigger.
There are plenty of options available to you if you want to change your car. Depending on the circumstances you may be able to change your car on finance or make additional payments on your car finance to end your agreement more quickly.
What should you do if you can’t afford your car finance repayments?
If you’re struggling to afford your monthly repayments, it doesn’t necessarily mean you need to return your car. You should speak to your car finance provider first. Be honest about your situation and tell them why you’re finding it hard to pay.
You should do this as soon as you realise you might not be able to make a repayment. If you default on your payments, you may incur extra fees. Your credit rating may also be negatively affected.
If you’re finding it difficult to make your repayments, you could be entitled to some ‘Breathing Space’ – a Government Debt Respite Scheme.
If you need some time to seek advice or come up with a repayment plan, help is available. Contact your lender to discuss the options available to you.
If you’re a Moneybarn customer and finding it difficult to keep up with repayments, you can contact us, and we will be happy to discuss your options.
We are unable to give debt advice, however there are lots of helpful organisations who can. These include:
- StepChange, who offer a freephone debt advice service
- MoneyHelper, who have a range of free money tools and information
Can I give my car back to the finance company?
If you still think that handing your car back is your preferred option, you’ll need to pay close attention to the type of finance you have.
Some of the most popular types of car finance agreements in the UK are Personal Contract Hire (PCH), Hire Purchase (HP), Personal Contract Purchase (PCP) and Conditional Sale (CS). You can also take out a personal loan to finance a vehicle.
Each type of agreement has different terms for handing the car back, so check the details of your contract. Every car finance agreement is different and your contract will explain the terms of your agreement. Or, if you’re not sure, contact your lender.
To learn more about the different car finance options, discover our guide explaining the different types of car finance. Or keep reading and we’ll explain if you could hand back your car for the most common types of finance.
Can you hand back your car on a Conditional Sale (CS)?
At Moneybarn, we use a Conditional Sale agreement for car finance, which means you will only legally own your vehicle once you’ve made your final repayment. While you are in the agreement, you will be the registered keeper so will be responsible for maintaining and looking after the vehicle.
If you want to end your Conditional Sale agreement early by voluntary termination, you’re liable for 50% of the total amount payable that was agreed at the start of the agreement, and any arrears or charges where appropriate.
When you voluntarily terminate your contract, you’ll need to hand the vehicle back to us in good condition.
If you’re a Moneybarn customer and would like to discuss if this is an option for you, contact us and we can help.
Can you hand back your car on PCH (Personal Contract Hire)?
If you have a Personal Contract Hire plan, you should be able to hand the car back to the finance company whenever you please. However, there is likely to be an early hand-back fee.
The leasing company will usually calculate the fee and ask you to pay it. When you hand the car back, it’ll need to be in good condition and within its pro-rata mileage limits. There might be other requirements depending on your agreement. If you’re unsure, check your contract or contact your lender.
If you pay the early exit fee and meet these other conditions, you shouldn’t have any issues returning the car. Your credit rating also shouldn’t be affected.
Can you hand back your car on HP (Hire Purchase)?
You can end a Hire Purchase (HP) agreement early through voluntary termination. This means repaying half of the total amount payable, plus any arrears or charges if applicable.
If you haven’t repaid 50% of the total amount payable, you could pay the remainder to reach this point. This amount can be found in your contract.
Can you hand back your car on PCP (Personal Contract Purchase)?
With a PCP agreement, you can hand the car back early if you’ve paid off 50% of the total amount payable, as set out in your contract.
If you’re unsure, check your contract or ask your lender.
You also need to make sure your car is in good condition and within its mileage limits when you hand it back. If not, you might be charged extra according to your contract.
Can you hand your car back with a personal loan?
A personal loan is a lump sum of money you are given, that is repaid usually monthly over a set period. It usually won’t be tied to the car so handing the vehicle back to a lender isn’t appropriate as it isn’t a part of the loan agreement.
As you would be the legal owner of the car, if you decide you don’t want it anymore, you can sell or trade it in as you see fit. You could then use this money to pay back the loan or get a different car.
What is voluntary termination?
If you choose to end your agreement early, you’ll be voluntarily terminating your contract. So, what does this mean, and how does it affect you?
‘Voluntary termination‘ is a term that originates from Section 99 of the Consumer Credit Act, 1974. A car finance customer has the legal right to cancel an agreement early by voluntarily terminating the agreement.
Voluntary termination requires you to inform your lender, in writing, that you intend to terminate the finance deal early. You would be liable for half of the agreed finance amount, plus any arrears or charges if appropriate.
If you are a Moneybarn customer and are thinking about voluntarily terminating your agreement, please contact us and we can discuss your options.
FAQs about returning your car to the finance company
Can I transfer my car finance agreement to someone else?
Everyone has different personal circumstances, which is why every car finance agreement is different.
For this reason, most lenders will not allow you to transfer your car finance to another person, or take out two cars on finance. Nor could you finance a car for someone else.
Do I own my car if it's on finance?
It depends on the type of finance you have.
With HP, PCP and CS, you are the registered keeper for the time of your agreement. This means you do not fully legally own the car so there might be restrictions on modifying or selling the car, as we explained earlier.
In these types of finance, you do not legally own the car until you have fully paid the finance.
With a personal loan you legally own the vehicle, as the loan isn’t tied to the vehicle itself. Rather, the bank has given you a lump sum with which you decided to buy a car. So in that case, you are the full owner.
Can I sell my car before I've paid off the finance?
No. You’re not the car’s legal owner, so it’s not yours to sell. You need to wait until you’ve paid your full outstanding balance before you can sell the vehicle.
For a better road ahead
Moneybarn is a member of the Finance and Leasing Association, the official trade organisation of the motor finance industry. The FLA promotes best practice in the motor finance industry for lending and leasing to consumers and businesses.
Moneybarn is the trading style of Moneybarn No. 1 Limited, a company registered in England and Wales with company number 04496573, and Moneybarn Limited, a company registered in England and Wales with company number 02766324. The registered address for these companies is: Athena House, Bedford Road, Petersfield, Hampshire, GU32 3LJ.
Moneybarn’s VAT registration number is 180 5559 52.
Moneybarn Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702781)
Moneybarn No. 1 Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702780)
