The right, and where it comes from
Sections 99 and 100 of the Consumer Credit Act 1974 give you a statutory right to end a regulated hire purchase or conditional sale agreement and hand the goods back. Section 100(1) says the debtor is liable to pay "the amount (if any) by which one-half of the total price exceeds the aggregate of the sums paid and the sums due in respect of the total price immediately before the termination".
Strip that back: once you have paid half the total price, you can end the agreement and hand the car back owing nothing more. Below half, you pay the difference and then you are done.
Which half
Everyone knows the 50% rule. Almost nobody is told which half. On a PCP, the total price includes the balloon payment — formally the Guaranteed Minimum Future Value or optional final payment — because the balloon is part of the total price of the goods. So the halfway point is not halfway through your monthly schedule. On a four-year PCP the 50% point commonly falls in the final third of the agreement rather than at month 24.
On Hire Purchase there is no balloon, the total price is spread evenly, and you usually reach 50% around the halfway mark.
Two provisions that modify it
Under s.100(3) a court may order a smaller payment if satisfied that a lesser sum equals the creditor's actual loss. Under s.100(4) the amount increases if you have failed to take reasonable care of the goods.
Condition, mileage and your credit file
The car has to go back in reasonable condition. The lender cannot charge for fair wear and tear, but can charge for damage beyond it, for excess mileage and for poor maintenance. Those charges can be appealed. Voluntary termination may appear on your credit file, but it is unlikely to affect your credit score or your ability to get finance in future — unlike arrears.
While you have the agreement out
If you had car finance between 6 April 2007 and 1 November 2024, you may be owed money under the FCA's motor finance redress scheme: £7.5 billion in total, averaging £829 per agreement. People who have never complained are contacted only if they are owed money or their claim is about to time-bar, so check with the lender yourself. The backstop deadline to complain is 31 August 2027. Claims firms take a cut of money you can claim free.
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