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Withdraw or pay off car finance agreement

You have a legal right to withdraw from, or cancel, your car finance agreement within the first 14 days of signing the contract. This is commonly referred to as a ‘cooling off period’ and, during this time, you do not have to give any reason for changing your mind. If you do wish to withdraw from the finance agreement within the 14 days, you'll need to do this with the lender directly. You're unable to withdraw from the purchase of the vehicle itself so if you did withdraw from your finance agreement, you would need to find alternative funds to pay for the vehicle.

Anything after the 14 days would then essentially fall into the bracket of paying off your agreement earlier than agreed. You can do this, at any time, with all types of finance that we offer, however there are a few things to consider depending on which type of finance you took out.

With HP Car Finance, Conditional Sales and Personal Loans there may be a charge for early repayment, but you will save on interest as you’re paying off the agreement early.

For PCP Car Finance things are a little more complicated due to how this type of finance works. The key thing to remember about PCP finance is that you’re making fixed payments on the depreciation value of the car. This means the remaining balance left to pay may amount to more than what the car is actually worth. Visit our page for more information on PCP car finance.

If you want to cut your PCP agreement short, you can't just hand the car back to the finance company and walk away, because for the vast majority of the contract it's worth much less than the remaining balance owed to the finance company. If you did end it early there is a chance the finance company will ask you for additional payments, to make up any difference between what’s owed vs what the car is worth.

Written by

Mike Barlow

Content Manager

Mike has worked at Zuto since 2018 and uses his experience within the industry to help customers understand the ins and outs of car finance.

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