Glossary · UK
What is Voluntary Termination (Car Finance)?
A legal right under the Consumer Credit Act 1974 to hand back a car on hire purchase or PCP once you have paid at least 50% of the total amount payable, ending the agreement early.
Full Definition
Voluntary termination is a statutory right under sections 99 and 100 of the Consumer Credit Act 1974, available to anyone with a regulated hire purchase (HP) or Personal Contract Purchase (PCP) agreement in England, Wales, Scotland and Northern Ireland. Once at least 50% of the 'total amount payable' under the agreement has been paid (including the deposit and any part-exchange value, not just monthly instalments), the borrower can give written notice to end the agreement and hand the vehicle back, with no further payments due beyond that 50% threshold plus any arrears or damage charges outside fair wear and tear. It is commonly used when someone can no longer afford payments, or a PCP's mileage or condition means keeping it to the end and paying the optional final balloon payment no longer makes financial sense. If less than 50% has been paid, the borrower can still terminate but must make a lump-sum payment to bring the total paid up to the 50% threshold.