Cancelling Hire Purchase Agreements

Section 99 of the Consumer Credit Act 1974 determines when you can voluntarily terminate a lease-purchase (HP) or a personal purchase (PCP). It includes both new and used cars. The law is designed to protect people who have entered into a financing contract but, at some point, could no longer afford their monthly repayments. This can happen for a number of reasons, z.B. if you lose your job or if you have another change in financial situation, which means you cannot pay for your auto financing contract. While, as has already been said, the legislation covers both the PCP and the HP, the two types of funding agreements differ slightly in their operation. If you or the lender terminates the lease or conditional sales contract, you may need to terminate the insurance separately, as this is often considered a separate agreement. You can always use your cancellation in writing. You can cancel and return something you pay for by renting, but you may owe money to the company from which you purchased it.

PCP agreements can be terminated prematurely as long as you have repaid 50% of the total amount of financing to the financial company. Note that the total amount of financing includes all the interest and fees that you must also pay. Perhaps the most important thing is that it will contain the payment of the ball. Paying for the balloon is important because it means that you probably won`t pay 50% of the entire financing agreement until the date of your monthly repayment. Or, in other words, you just can`t get half the deal and then decide to stop – you also have to take into account the payment of the ball. In addition to the 50% refund, you must have taken care of the car. This means that there is no damage (except normal wear). If you check these boxes, you can terminate the contract. Here too, just like PCP agreements, if you have not repaid 50% of the total amount of financing, you can make up the difference so that you can cancel. The same rule that the car is in good condition also applies to HP agreements.

Conditional selling is similar to rental sales. The contract generally provides that the goods do not belong to you until you have paid the last tranche and the lender may be able to take back the goods if you fall back with payment. Use this letter if you want to terminate a lease with your creditor. You can find information on the use of this letter in our rental-purchase and conditional sale information sheet. The PCP is an incredibly popular option for car finance contracts, thanks to its flexibility. You can choose the car and decide how long the term will last. As part of a PCP agreement, you must pay a first deposit and then a number of monthly repayments. When these refunds expire, you can choose whether or not to own the vehicle. If you do, you must pay a “balloon payment” to buy the car. Once it`s paid for, the car is all you own.

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