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What is Voluntary Termination?

Tim Carpenter, Dedicated car finance expert
Written by Tim Carpenter
Edited on

There may be a number of reasons why you may need to prematurely end the agreement you have with a car finance company – you are leaving the country to work abroad, for example, or your financial circumstances have changed. Ending the agreement like this is called Voluntary Termination (VT).

In these circumstances, every finance company is likely to differ in its detailed terms and conditions – so make sure you understand them.

Legally, finance companies give you the right to VT once you have made 50% of the total repayments you agreed (that is, half of the amount borrowed, plus interest, plus any fees), without imposing any further financial penalty.

This is generally subject to the vehicle being returned undamaged, maintained in a roadworthy condition (including any MOT), and within any mileage limitation that may have been agreed.

Voluntary termination is also typically allowed after 50% of the amount payable has been paid, even if the value of the vehicle at that time is less than the amount you have paid.

Provided you have made every payment, including the finally agreed payment, on time and are not in arrears, your VT is not recorded or have any impact on your credit file kept by the credit reference agencies.

Following a VT, you may then be free to apply for fresh car finance with your credit score intact and an ability to choose a replacement vehicle from any reputable dealer in the UK or through a private sale.

At CarFinance 247, we can often help customers that have recently ended another car finance agreement. Whether your credit is excellent, fair or poor, we have finance options available, and with no deposit required! Remember, it isn’t just car loans we can offer -we can finance vans, motorbikes and motorhomes too.

Get a quote No impact on your credit score

Rates from 6.9% APR. Representative APR 27.4%

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Tim Carpenter, Dedicated car finance expert
Tim Carpenter Car Finance Expert
5 Years
Total cost of credit £ XXX.XX
Total repayment £ XX,XX.XX
48 monthly
payments of
£ 245 98

Rates from 6.9% APR: the exact rate you will be offered will be based on your circumstances

Representative example: borrowing £6,500 over 5 years with a representative APR of 27.4%, an annual interest rate of 27.4% (Fixed) and a deposit of £0.00, the amount payable would be £188.74 per month, with a total cost of credit of £4,824.37 and a total amount payable of £11,324.37

Rates may differ as they are dependent on individual circumstances. Subject to status.

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