If you're feeling overwhelmed by your car finance payments, you're not alone, and there are options available to help you regain control. Two common ways to end a car finance agreement early are Voluntary Termination (VT) and Voluntary Surrender (VS). Although they sound similar, they have very different consequences.
In this guide, we'll break down:
Whether you're exploring your legal rights or just need a fresh start, understanding your options is the first step.
Voluntary termination is a legal right under the Consumer Credit Act 1974 that allows you to end your car finance agreement early, without facing extra charges, as long as certain conditions are met.
To qualify, you must:
If you meet these terms, you can return the car and walk away with nothing more to pay, unless the vehicle is damaged or has exceeded mileage limits (for PCPs).
✅ Best for: People who are up to date with payments and want to end the agreement fairly and legally.
Voluntary surrender means you hand the car back to the finance company even if you haven’t reached the 50% repayment threshold. It’s not a protected legal right like VT, it’s simply an option for those who can’t continue making payments.
However, unlike VT, you’ll still owe:
Your lender will usually sell the car at auction, and you’ll be responsible for covering any shortfall.
⚠️ Best for: People who are struggling significantly and can no longer keep the car, but haven’t reached the VT threshold.
|
Feature |
Voluntary Termination (VT) |
Voluntary Surrender (VS) |
|
Legal right? |
✅ Yes (Consumer Credit Act) |
❌ No |
|
Must repay 50% of agreement? |
✅ Yes |
❌ No minimum |
|
Still owe money after return? |
❌ Usually no (if conditions met) |
✅ Yes, balance minus resale |
|
Car condition matters? |
✅ Yes, reasonable condition |
✅ Yes, resale value matters |
|
Impacts credit file? |
⚠️ May show as settled early |
⚠️ May show default if unpaid |
If you’re thinking about voluntarily terminating a PCP (Personal Contract Purchase) car finance agreement, there are some key things to consider. To be eligible, you must have repaid at least 50% of the total amount payable, which includes the loan amount, interest, fees, and charges. Importantly, the car must also be returned in good condition, with no excessive wear and tear.
With PCP agreements, many customers forget that the balloon payment (the lump sum due at the end) counts toward the total amount payable. Because this balloon payment is typically large and due at the end of the contract, most people haven’t reached the 50% repayment mark early in the agreement, which means you may need to pay extra to reach that threshold before you can exit through voluntary termination.
Ending a Hire Purchase (HP) car finance agreement early through voluntary termination is typically more straightforward than PCP, as there’s no balloon payment involved. To qualify, you’ll need to have paid at least 50% of the total amount payable, which includes the car price, interest, and any fees.
If you haven’t yet hit the halfway point in your agreement, you may still choose to voluntarily terminate, but you’ll need to top up the balance to reach the 50% threshold first. Once you’ve done that, you can return the car in reasonable condition and walk away from the contract with no further payments due.
This option is often used by drivers facing financial difficulty, life events, or a change in circumstances that make continued car ownership impractical or unaffordable.
Voluntary termination is often used by people who are facing financial hardship, experiencing life changes, or simply no longer need the car. Some of the most common reasons include: a drop in income due to redundancy or reduced hours, health issues that affect driving or working, relationship breakdowns, or changes in lifestyle, such as relocating to a city with better public transport. Others choose to voluntarily terminate when they realise the car is no longer affordable, or they want to avoid long-term debt tied to a vehicle they no longer value. Because this is a legal right under the Consumer Credit Act, it gives you a way to walk away from your agreement early, fairly and with dignity, as long as you’ve met the 50% repayment threshold.
If you're considering VT or VS due to illness, bereavement, redundancy, or other life challenges, you may be classed as a vulnerable customer. This could mean you're entitled to extra support, including:
At Marsh Finance, we know that life happens. Whether you're exploring voluntary termination, surrender, or simply unsure what to do next, our goal is to help you move forward, not punish you.
We offer:
👉 Contact our team confidentially »
If you're in financial difficulty, we recommend getting advice from independent services:
Financial Support & Debt Help
Mental Health & Wellbeing