Instead, fill out our simple, non-binding car loan application form and we get to work finding a local dealer. Determining the best way out of an unwanted car loan largely depends on why you want to deal with this situation. Let`s look at a few scenarios and what you can do to effectively «terminate» your car loan: Section 99 of the Consumer Credit Act 1974 specifies when you can voluntarily terminate a lease agreement (HP) or a personal sales agreement (PCP). It includes both new and used cars. The law is intended to protect people who have accepted a financing contract, but at some point can no longer afford their monthly repayments. This can happen for a number of reasons, for example.B. if you lose your job or have another change in your financial situation, which means you can`t pay for your car financing contract. While, as noted above, the law covers both PCP and HP, the two types of financing agreements differ slightly in their operation. Car purchase contracts are quite tight and according to the Consumer Law Group, it`s quite difficult to cancel one as soon as you sign on the polka dot line.
Certain conditions may lead to the termination of a car purchase contract. Such an event is called yo-yo selling. This is when the dealer gives you the keys and makes you sign the documents before getting final approval of the credit terms from a lender. If the lender does not want to accept the agreement, the contract is terminated. If you paid for a vehicle in cash or with a private loan from your financial institution, but you refuse to take possession of the vehicle, it is often too late to change your mind after signing the contract of sale without consequences. Since you can`t really cancel a car loan, it`s good to know how to get out of a car loan properly in order to avoid negative effects on your credit and score. These effects could in turn affect your ability to get another car loan. If you`re already dealing with bad credits, this is especially important….