When it comes to buying a car, many people choose to finance through a hire purchase agreement. This type of agreement allows you to pay for the car in installments over a set period of time, with the option to own the car outright at the end of the term.

However, what happens if you can no longer afford the monthly payments or simply no longer want the car? You may be wondering if it`s possible to hand the car back without any financial penalties.

The short answer is yes, but it`s important to understand the terms of your specific hire purchase agreement.

First, it`s important to know that handing the car back is not as simple as just returning it to the dealership. You will need to contact your lender and inform them that you wish to terminate the agreement early. They will then provide you with a settlement figure, which will include any outstanding payments and any fees or charges associated with ending the agreement early.

If you have made more than half of the total payments on the agreement, you have the right to terminate the agreement and hand the car back without any further financial penalty. However, if you have not yet made half of the payments, you may have to pay the difference between the total payments made and the half-way point.

It`s also important to note that handing the car back may have an impact on your credit score. If you have missed any payments or defaulted on the agreement, this will be reflected on your credit report, which could make it more difficult to obtain credit in the future.

If you are considering handing your car back, it`s always best to speak to your lender and discuss your options. They may be able to offer alternative solutions, such as deferring payments or restructuring your agreement to make it more affordable.

In conclusion, it is possible to hand a car back when financing through a hire purchase agreement, but it`s important to understand the terms of your specific agreement and the financial implications of doing so. Always speak to your lender before making a decision and consider all of your options before taking any action.