Can You Get Out of PCP Car Finance?

There are a number of reasons why some drivers consider getting out of PCP car finance. It’s possible that they don’t need the car anymore and would rather simply end the car finance agreement early. For others, the reason could be because they’re facing financial difficulties and could no longer afford to make the monthly payments. No matter your reason, you might be asking at least two questions, “can you get out of car finance early?” And “how can I get out of my car finance?” Let’s try to answer them in this article. 

How to Get Out of Car Finance UK

If you're wondering how to get out of a car finance agreement early, let's explore some options available to you. 

Voluntary Termination

One way to end your PCP car finance early is to opt for voluntary termination. However, for this to happen, you should have paid, or be able to pay, at least 50% of the total amount repayable already. Voluntary termination of your car finance agreement is your legal right, according to the Consumer Credit Act of 1974. 

This is a good way out of your contract if you’ve been having issues keeping up with your monthly repayments. Before proceeding, check if you’ve already reached at least half of the amount you’ve loaned including interests and fees. If you have indeed paid 50%, then you may choose to terminate your PCP car finance agreement. Do note that once you do this, you won’t be able to get any refund for the payments you’ve already made. 

Car finance companies typically require the borrower to give written notice of their voluntary termination. Along with this, the car also needs to be returned. If you cannot do so yourself, you may have the vehicle collected but this usually requires an additional charge. Next, the lender will assess the car to see if there is any damage beyond fair wear and tear and if it has exceeded the mileage limit if that was part of the contract. If you haven’t taken good care of the vehicle, then expect to shoulder the repair costs and pay for excess mileage charges.

Early Settlement of PCP Car Finance

What if you haven’t reached at least 50% of the total amount repayable? In this case, you can still get out of your PCP agreement through early settlement. This is a good option if you have enough funds to pay off the remaining balance in full. You may proceed with the early settlement of your PCP contract at any point in your agreement. 

With this route though, you would have to pay the outstanding balance, administration fees, and also the balloon payment indicated and agreed upon at the start of your PCP contract. What’s good about the early settlement of a PCP agreement is that you won’t have to pay for future interest, although do check your contract if there is an early settlement fee that you need to pay. Once all payments have been made, you will be the owner of the vehicle. 

What If I Can’t Afford to Settle My PCP Early?

As you can see, getting out of PCP car finance is not as simple as handing over the car and walking away. There could be fees and charges that you’d have to settle first. If you haven’t reached 50% yet, then you need to pay a lump sum to reach the halfway point of your total amount repayable. But what if you can’t afford to settle the payments to get out of your PCP agreement? 

In this case, it’s best to get in touch with your car finance company as soon as possible and inform them of your financial situation. You might be having a hard time making payments because your circumstances have changed. Do explain this to the lender and ask what your options are so you can terminate the agreement. The car finance company will most likely help you out by adjusting your contract term so that the monthly repayment amount will be more affordable for you or draft a repayment plan. 

What’s important to bear in mind here is that they can only help you if you are honest with them about your situation. If you’re having financial difficulties, you might have a lot going on in your mind. Remember to call your lender before you miss any payments. Also, don’t default on your loan because it will just make the situation worse for you. The car finance company could take legal action if you fail to communicate with them about your financial obligation.  

Lenders would most likely prefer to make adjustments on your PCP car finance agreement than deal with collections agencies and lawyers so they can recoup the money they loaned to you. But remember, you have to inform them of your situation as soon as possible and don’t wait for things to get out of hand before you get in touch with the car finance company. The sooner you can deal with your financial obligations, the better it will be for everyone. 


So if you have been wondering how to get out of PCP car finance, or if you can get out of any car finance agreement early, then you now know that you may choose voluntary termination or early settlement. With voluntary termination, you first need to have paid at least half of the total repayment amount. You may then return the vehicle to the car finance company. With an early settlement, you need to pay the remaining balance you owe in full including fees and the balloon payment so the ownership of the car can be transferred to you. So you do need to know how your PCP car finance has been calculated. If you’re taking one of these routes, be sure to give notice to the car finance company in writing and always communicate your case clearly to them.