Anyone handed their car back to finance company

[Tacali]

I've had my car on Hire purchase for over half the tetm bow. I was noseying at a new car and the salesman said I cam hand my car back to the finance company and it won't affect my credit or applying for finance in the future.

Has anyone done this? I would have to then get another car on finance but not sure if I'd have to wait a certain length of time or if it's a difficult thing to do

Can't you just sell it or trade it in for a new vehicle? As long as you can settle the finance I don't know why you'd choose to hand it back. Have you checked if you'd be in negative equity?

There's potential penalties for repair of any damage and admin charges too.

It's a legal right after you've made half the payments. It doesn't negatively affect your credit rating.

I don't know if you lose out re the value of the car vs outstanding finance, but this should be covered in your HP agreement.

As for any scratches or other damage, look at the BVLRA fair wear and tear guidance. Lots of minor damage is covered by that. I gave a car on PCP up under the 50% rule and it was fairly scruffy with quite a lot of scratches.

The man who assessed it said there was only one of the bumper scuffs where I'd backed it into the corner of a brick wall that was outside what is allowed and I got a bill for about £60 for this, that was all I had to pay.

We didn't do this as part of a new purchase, but we did hand back our last car halfway through the term. As long as we'd paid 50% of the loan off, we had the right to hand it back and not pay any more with no credit impact. We were on PCP so not sure if HP is different, but the concept is valid.

What we did instead was sell it on Motorway. They bought it for £3k more than we owed on the finance. They paid the finance directly back to the dealer and gave us the extra money.

If.you are doing it through a garage they'd generally take your car as part-ex and arrange for the HP to be cleared as part of the overall deal.
Or is the car worth less than the outstanding HP?

You need to read the T&Cs on the agreement you signed.

These days checking the value is definitely worth doing. When I handed mine back, 7 years ago, it was pretty much worth what I owed on the finance, but due to the increase in value in cars, now the car could be worth more.

As an aside, the car I handed back was a 64 plate Skoda Citigo, worth around £4k at the time. I've just looked on Autotrader and it seems that, due to the increase in second hand car prices, a 64 plate Skoda Citigo is still worth at least £4k seven years later so the person who bought my car could sell it today and have not lost anything in depreciation in all that time. Mad.

That's useful to know. When I enquired about this they were really pushing the potential penalties if there was damage to the car and I worried that I'd pay far more for them to do repairs at their chosen company.

I've done it several times, I've dropped the car direct to an auction house. As long as the 50% has been paid there's no penalty for any damage or excess mileage.

Just double check the value as might be worth something as a part ex but it's a very easy process to just hand back

Thanks for your replies.

It's on hire purchase and if I was to trade it in, the trade in value is worth less than what I owe so I would need to owe like £2000

I don't know how long I'd have to wait after handing it back before re applying for finance again though that's the only problem.

Have you paid half of the total cost? Because that is what matters not being half way through the term.

True. I enquired on a car I hated and it was well past 50% time but hadn't paid 50% of finance. I traded it in at a loss I hated it so much!