Can I Cancel My Hire Purchase Agreement?

In today’s volatile economy, our financial circumstances can change drastically. This can affect our capacity to fulfil our obligations like making payments for car finance contracts. If you’re finding yourself in a tough spot, you might be asking, “can you cancel  a Hire Purchase agreement?” Under Section 99 of the Consumer Credit Act, yes, you have the legal right to cancel your car finance agreement. However, there are conditions that need to be met first. Here’s what you need to know about your Hire Purchase cancellation rights. 

You might also like to view our video on the subject, presented by the lovely Jade.....👇









Common Reasons to Cancel an HP Deal

There are several reasons why an individual would choose to cancel their Hire Purchase agreement. The most common one is because it has become difficult for them to keep up with the payments. It’s possible that they’ve experienced changes in their financial situation and they can no longer afford to pay the monthly instalments on the car. 

Another common reason is that the person no longer needs the vehicle. They could be moving to another place and it’s not practical to bring the car with them. In both scenarios, we can see that ending the Hire Purchase car finance contract is a reasonable thing to do. If the individual wants to cancel their HP agreement, the lender has to allow them to do so because it is the right of the consumer to end the contract. 

What are My Hire Purchase Cancellation Rights?

You have the legal right to terminate a Hire Purchase agreement according to the Consumer Credit Act. To do so, you must inform the car finance company in writing about your wish to end the contract. You must also be ready to return the vehicle if you want to cancel your Hire Purchase agreement. 

To proceed with the cancellation of your HP deal, you first need to have reached the point of at least 50% of the total amount repayable. If the total amount you've repaid hasn't reached that midway point, then the lender will ask you to pay a lump sum to get to the required figure. Once that's been settled, you may proceed with terminating your HP contract. Bear in mind that the payments you've made up to that point will not be returned to you. Along with that, you also have to hand back the vehicle to the car finance company. 

How to Cancel Hire Purchase Agreement

There are two ways that you can cancel a Hire Purchase agreement. The first option is called early settlement while the second choice you have is called voluntary termination. Early settlement is ideal if you have the money to pay off what you owe the car finance company earlier than the date stated in your Hire Purchase agreement. For example, if you happen to have extra cash and would rather pay the monthly instalments in advance so you can own the car, an early settlement is the way to go. 

If you choose early settlement, get in touch with your car finance company and ask how much you need to pay to own the car. This may include an early settlement fee, depending on the lender and what’s stated in your Hire Purchase agreement. If you look at this from the perspective of the lender, they’re going to lose some profit if you settle your car finance contract early because you wouldn’t be paying interest any more. So, expect certain fees and charges if you’re going to take this route. 

The other option to cancel your Hire Purchase agreement is voluntary termination. You can only proceed with this if you’ve already paid at least 50% of the total amount you owe the car finance company. You may then return the car and walk away. Just be sure that the vehicle is in good condition and there’s no damage beyond fair wear and tear. You might want to get the car checked by an auto mechanic first to make sure that the car is in top condition. If the car hasn’t been taken care of, the car finance company can charge you for the cost of repairing the vehicle. 

I Can’t Afford My HP Payments Anymore

Depending on your particular case, cancelling an HP agreement might be a bit more complicated than simply returning the car and no longer paying the monthly instalments. Remember that you’ve made an agreement with the car finance company to repay them the amount they loaned you. Ideally, you as the borrower should honour that agreement and make sure you complete the payments and finish the contract within the stated term. 

However, there’s no way to predict sudden changes in our financial situation so if you’re left with no choice but to give up the car, be sure to contact your car finance company immediately. Before you even miss out on the payments, call them as soon as possible and ask about what options are available for you and your current situation. Some lenders might make another arrangement for you and make the repayment term longer so that the monthly instalment amount will be more affordable for you. 

It’s important that you're honest with the car finance company about what you’re going through financially so they can find a way to make adjustments and help you. You just might be able to keep the car if they offer a new repayment scheme. But if you’re keen on returning the car and ending your car finance agreement, make this clear to the lender that it’s no longer possible for you to afford the monthly instalments. 


Before making any big financial commitments, make sure that you’ve carefully assessed your finances and that you know for sure that you can make the monthly payments on time every time. If there are changes to your situation that directly affects your capability to pay off what you owe on the car, contact your car finance company immediately to know what your options are, and the next steps you need to take to cancel your Hire Purchase agreement with them. 

If you car finance is with Carmoola, do get in touch with us, we will get back to you quickly - there is no call centre or long wait if you need to reach out, and our friendly team will be able to advise you. Carmoola prides itself on its flexibility, and there are a number of solutions we may be able to offer you. 👍😀