Reasons for Giving a Car Back
There may come a time when you decide that giving your car back to the finance company is the best decision. There are a few key reasons why this may be the most sensible option for you. Perhaps you are struggling to make the payments, or have unforeseen financial pressures that you need to address. Maybe you have moved house and you now have a longer commute or simply don’t need the car anymore.
There are a number of solutions if you are having difficulties with paying car finance. You might be able to defer payments for a period of time, adjust the agreement or come to an arrangement with the company that works for both parties. However, there may be times when handing the vehicle back to the finance company is the best option.
Before making a decision, it is important to be aware of the implications of handing a car back. If you have entered into a hire-purchase agreement, or a personal contract purchase, there will usually be a minimum amount that you owe. You need to be aware of this if you do return the car. This may well leave you with a shortfall to pay.
Getting advice is essential before making a serious decision. There are debt charities and consumer organisations that can provide information and advice. An advisor can explain the full implications of such a decision and advise you of any other options available.
The Process
If you have made the decision to return the car, there are certain steps to take. First of all, check the agreement and the handbook for detailed information about the return process. If there is an option to return the car early, you may need to make sure that the conditions of the agreement have been met. In some cases, you will be expected to pay a certain amount to cover any costs associated with the handing-back process.
Next, you will need to contact the finance company and explain your situation, and that you wish to return the car. They will usually inform you of any administrative costs and the time period in which the car needs to be returned. It is important to have all the documents associated with the vehicle ready, such as the handbook, logbooks, and licence plates. You should confirm any information or decisions with the finance company in writing.
Before handing the car back, you must make sure that it is in an acceptable condition, such as the condition it was when you took it out of the showroom. It must also have a valid MOT, road tax, and a valid MOT certificate. The company will often do a check of the car prior to it being returned, so it is important to make sure all the documentation is in order.
Once the car has been returned to the finance company, the hand back is complete and you are free from the agreement. The finance company will then be responsible for selling the car and settling what is owed. It is important to remember that any outstanding payments will still need to be made.
Impact of Handing Back a Car
Giving a car back to the finance company can have a number of financial implications, but it is important to consider other consequences too. Depending on the situation, it could affect your credit rating, which could have an impact on your ability to get credit in the future. It is essential to think about any longer-term consequences of returning the car, as well as any immediate financial implications.
It is possible that the finance company may pursue legal action if you have fallen behind with payments or if you do not meet the terms of the agreement. It may also be possible that they will contact third parties, such as employers. You should bear in mind that the process may not be straightforward and that you should obtain legal advice if you are unsure.
Options Available
Although it may be tempting to ignore payments, this will only make the situation worse and could result in more problems. The most sensible approach is to seek advice as soon as possible, even if this means contacting a free debt helpline, or speaking to a qualified financial advisor. There may be a range of options available, such as debt restructuring, debt consolidation or court repayment orders.
In some cases, a payment holiday may be an option if your circumstances have changed, or if you are struggling to make payments. This is when the finance company allows you some time to get back on track. You will still have to make regular payments but they can be reduced or deferred for a period.
In some cases, the finance company can freeze the debt. This means that they will write off the interest, and any further payments wil be reduced. It is recommended to get advice before agreeing to such a move, and you should be aware that interest can still accrue if payments are deferred.
Options Available
It is possible to sell a car back to the finance company, although it is important to check the contractual arrangements first. In certain cases, you may be able to reach an agreement where you can sell the car back and the finance company takes a portion of the sale price. Again, this is a decision that should not be taken lightly, and you should consider the possible implications and seek advice if necessary.
You may also find that other options are available, such as part-exchange or trading the car in. In some cases, you may be able to negotiate a new agreement with the finance company, or you might be able to come to some sort of arrangement, such as a payment holiday or a reduction in the amount you owe.
Overall, giving a car back to the finance company may not be the best option, but in some circumstances, it is the only option. The decision to do so should not be taken lightly and it is important to carefully consider all the implications of the decision, both short-term and long-term, before making a move.
Alternatives to Handing Back a Car
There are alternatives to giving a car back to the finance company, such as selling the car privately, or exploring other options such as part-exchange. Selling the car yourself may be the best option if you need to recoup some of your money, given the cost of handing the vehicle back to the finance company. It is important to bear in mind that the sale of the vehicle needs to be handled carefully if you wish to recoup most of the money owed.
If you need to replace the car, it is possible to explore part-exchange or leasing options. This may be a more cost-effective option than buying a car outright, and it may also be a more affordable alternative if you are struggling to make payments. Alternatively, you could look into car sharing or public transport, which may be viable options for some people.
It is also possible to contact the finance company and try to negotiate a new agreement, either by extending the repayment period over a longer period, or by reducing the amount you owe. In some cases, the finance company may be willing to accept a lump sum payment and forgive the debt.
The Bottom Line
It is important to consider all the options before deciding to hand a car back to the finance company. If you are contemplating this option, it is essential to seek advice and to be aware of the implications of the decision. Alternatives such as selling the car, part-exchange, or negotiating a new agreement should also be explored.
It is essential to carefully consider the implications of returning a car to the finance company and to make sure that the decision is the right one for you. It is also important to bear in mind that any outstanding payments must still be made, although the amount may be less if certain steps are taken.
