Will A Voluntary Termination Of My PCP Affect My Credit Rating?

A voluntary termination is included as part of any contract you sign for a Personal Contract Purchase (PCP), which allows you to leave your finance plan and to return your car early, so long as you have made at least 50% of your required payments across the entirety of the agreement, and with suitable justification to support your decision (usually financial). But would a voluntary termination of your PCP plan negatively impact your credit score?

After all, it is a real concern for motorists, especially if their reasons for applying for a voluntary termination are monetary. The worry is that they are exiting the finance plan early because they are struggling to keep up with the required monthly payments, but if their credit score takes a hit as a result of the decision, then they will be in an even weaker decision afterwards, because they are now viewed as having poor credit should they try to apply for a cheaper motor, or for another major purchase that requires a pre-plan credit check.

There is good news for those who have these fears about their credit score being affected by a voluntary termination, though. In most situations, your credit score will not take a hit as a result of you applying for, and successfully receiving, a voluntary termination. Bear in mind that low funds is just one explanation as to why motorists would trigger this option; perhaps the decision is for a totally unrelated reason, in which case it should not really impact you financially. And even if it was because your circumstances had suddenly changed resulting in you struggling to make ends meet, it would be a further hindrance if your credit score also dropped in the process.

It is worth noting, however, that while your credit score will not be severely impacted, if your finances continued to suffer, then eventually this would result in you being deemed as having poor credit, which could have a knock-on effect to a future car purchase several years down the road. Also note that any dealerships and finance companies will note that you have previously received a voluntary termination, which might make them a little more hesitant to green-light a new finance plan for you (though the option is there, so it is not a major problem; just something that they will be mindful of). However, these are hypotheticals; in the grand scheme of things, while a voluntary termination is not an ideal scenario, if you follow the correct procedures then it might be the best decision for you and your finances, and in the process, there should not be any negative consequences to your credit score.

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