Can I Get Out of PCP Car Finance Early?

There are various reasons you may decide you want to end a PCP agreement early.

It could be you’ve changed your mind about getting into a PCP arrangement, or you may want to pay it off early.

If you’re looking at how to get out of car finance, we’ve put together this brief guide to help.

We’ll explore the steps and implications of ending PCP early, including voluntary termination PCP options.

You’ll also gain an understanding of how PCP car finance works so you know what to expect when it comes to an end.

By the end of this guide, you’ll be able to work out if getting out of a PCP agreement early is the right option for you 😊

Got a specific question? Why not jump to:

How does PCP car finance work?

Personal Contract Purchase (PCP) is a popular car finance option that offers flexibility and it typically comes with lower monthly payments than other types of finance.

Initially, you make a deposit and then pay monthly installments. These are typically lower than traditional car loans, as they only cover the car's depreciation.

Unlike Hire Purchase (HP) finance, at the end of the PCP term, you're faced with three choices.

You can pay a balloon payment to own the car outright, return the vehicle to the lender, or trade it in for a different vehicle.

This flexibility lets you decide what to do based on your current financial situation and needs.

A diagram to show how personal contract purchase works

Is exiting a PCP agreement possible?

Exiting a PCP agreement can be done in a few different ways, depending on your circumstances.

One of the more straightforward options is taking advantage of the 14-day cooling-off period.

This period is a standard feature in all car finance agreements, including PCP. It lets you cancel the contract within two weeks from your agreement being signed or the day you receive a signed copy of the agreement, whichever of these happened later.

It’s an easy way to back out of the agreement if you have second thoughts, or if your situation changes suddenly. It’s worth noting that this will not always cancel the purchase of the vehicle, unless the dealership and finance company agree. This means that although you can withdraw from the credit agreement, you may still need to keep the vehicle and pay the finance company back the amount that was borrowed.

Another method is early settlement, where you pay off the remaining balance of the PCP agreement before the end of the term.

Settling early can save money on interest, though it's important to consider any early repayment fees.

You can use early settlement calculators to help determine how much it will cost to exit your agreement.

More car finance guides

Can you end a PCP agreement early?

Exiting a PCP agreement early is an option, and it’s known as voluntary termination.

Governed by consumer credit laws, voluntary termination lets you return the vehicle before the agreement ends without paying the full amount.

However, you will need to have covered at least 50% of the total finance cost and there are implications to consider.

For example, exiting early may affect your credit score and potential future finance agreements.

It's important to review your contract and understand the potential impact before deciding to terminate the agreement voluntarily.

What other options are available?

While PCP can be an ideal option for those looking to benefit from lower monthly repayments, it isn’t suitable for everyone.

You may find hire purchase car loans are a better fit, especially if you don’t have a lump sum to pay a balloon payment.

At Carmoola, we provide no-fuss HP loans that can be used at any approved used car dealership.

We work differently to other lenders, letting you apply and receive your funds through our easy-to-use app.

Learn more about our simple process, and see just how easy it is to get behind the wheel of your dream car 🏎️ 😀

FAQs about getting out of PCP car finance:

Can I end PCP early without penalties?

Ending a PCP agreement early can incur penalties. It depends on the terms of your contract and how much of the total amount payable you've covered.

What are my options for ending PCP before term?

Options include paying off the remaining balance, voluntary termination (if you've paid 50% of the total amount), or part-exchanging the car under a new agreement.

How To End a PCP Agreement Early?

You can end a PCP early by settling the remaining balance, part-exchanging the car, or voluntary termination, depending on your contract and payments made.