As part of some finance plans, such as a Personal Contract Purchase (PCP), you will have the opportunity to apply for a voluntary termination at a particular stage of the deal, so long as the circumstances at that time allow for you to do so, and with sufficient justification and evidence to support your decision.
A voluntary termination is put in place to protect drivers who, for any number of reasons, might find themselves suddenly unable to make their scheduled monthly payments for their vehicle and would struggle to find the funds to provide consistent payments in the months and years to come. In most cases, a voluntary termination becomes accessible once you have paid at least 50% of the value of the vehicle from the beginning of the deal, although other plans only allow for a voluntary termination to be triggered at a much later stage.
So, how would you start a voluntary termination if you happen to be in a position where it seems to be your best course of action, and the timing of your payment period allows you to do so? You would get in touch with your finance company to explain your desired decision and the reasons behind it, with the intention of sending the vehicle back to the finance company. Assuming that you have followed the correct protocol at the right time, and you have any requested proof and documentation, the finance company has to comply with your application for a voluntary termination. Of course, it is possible that they may find information which either delays or prevents this from going ahead, but assuming it is green-lit, this officially begins the voluntary termination process.
It should be noted that when we mention 50% of the value of the car based on the deal you originally signed, this takes into account the large balloon payment which only comes into play at the very end of the plan. In other words, this does not mean 50%of the agreed monthly expenses, but the entire amount that you will be required to pay for the duration, which includes the balloon payment and also any required deposits. Therefore, you couldn’t just decide at exactly the halfway point of the plan that you wish to leave early because you haven’t yet reached the 50% payment stage, and your timing might also provide the finance company with a reason to potentially decline your request.
You can find out more here or contact us for more information.