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Yes: under section 99 of the Consumer Credit Act 1974 you can terminate a regulated hire purchase or conditional sale agreement before the final payment falls due. You must give written notice and return the vehicle, and if you have paid less than half the total amount payable, you will typically owe the difference under section 100.
TL;DR:
- Borrowers who have paid less than half the total amount payable may still terminate early but will usually owe the shortfall to reach 50 percent of that sum.
- The section 100 calculation considers the total payable amount, not just the vehicle’s cash price, and any arrears owed are added on top of the shortfall.
- Proper notice for termination must be in writing, include specific details, and be sent via recorded delivery with proof, while photographs of the vehicle condition strengthen the case.
- Lenders can only charge for damage beyond fair wear and tear, and ambiguous mileage charges can be challenged if not clearly specified.
- A correct voluntary termination usually appears as a settled agreement on your credit file and does not carry the negative marks of a repossession or default.
Section 99 gives anyone with a regulated hire purchase or conditional sale agreement a statutory right to end the deal early, sometimes called voluntary termination. It applies at any time before you make the final payment, regardless of what the finance company’s own terms say about early exit, because this is a right written into law rather than a contractual favour. It does not apply to every agreement: some conditional sale contracts involving land, or ones where ownership has already transferred to you, sit outside its scope.
The right hinges on how much of the “total amount payable” you have already paid. That figure includes the deposit, all instalments and any fees rolled into the agreement, not just the cash price of the car.
It is worth separating this from voluntary surrender, which is when you simply hand the car back without invoking section 99, often after falling into arrears. Surrender usually leads to the lender selling the car and chasing you for any shortfall, and it tends to sit on a credit file in a way that looks closer to a repossession. A properly executed voluntary termination is a different, cleaner route.
Section 100 of the Consumer Credit Act 1974 sets the formula for what you owe on termination. Put simply, you pay the amount by which half the total amount payable exceeds what you have already paid, unless the agreement specifies a smaller sum or a court decides a smaller figure is fair.
Two examples make this concrete. Say a car has a total amount payable of £20,000 and you have paid £6,000 so far. Half of £20,000 is £10,000, so you owe the £4,000 shortfall before the lender can accept termination. Now say you have paid £11,000 on that same £20,000 agreement: since you have already passed the halfway point, you owe nothing further beyond returning the car in reasonable condition.
Statistic: Under section 100, a court can order a smaller payment than the formula produces where it finds the calculated sum unfair, giving borrowers a genuine route to challenge inflated demands.
Getting the notice right matters more than most owners expect, because a badly worded letter gives the lender room to dispute that termination happened at all.
Citizens Advice provides a template letter that covers the required wording, which is worth using as a starting point rather than drafting from scratch. Your liability for insurance, tax and safe storage of the vehicle continues until the lender actually collects it, so do not stop paying for cover the moment you post the notice.
Pro Tip: Get the collection date confirmed in writing before you stop driving the car, and keep every piece of correspondence until the account shows as settled.
Lenders can only charge for damage beyond fair wear and tear, meaning ordinary scuffs, small stone chips and worn tyres from normal use should not attract a bill. Larger dents, cracked windscreens, missing parts or heavily worn interiors typically do.
Excess mileage charges are common but often poorly explained in the contract itself, and the Financial Ombudsman Service has upheld complaints where the mileage terms were unclear or buried in cross-referenced clauses. If your paperwork does not spell out the allowance and the rate per excess mile in plain terms, that ambiguity can work in your favour.
Keeping this evidence together before the lender’s inspection report arrives puts you in a far stronger position if a charge looks inflated.
A voluntary termination carried out correctly under section 99 generally shows on your credit file as the agreement being settled early, rather than as a default or repossession. That distinction is significant because lenders and other creditors read those markers differently when assessing future applications.
Arrears do not block your right to terminate, but they do not disappear either. Whatever you already owe in missed payments sits alongside the section 100 sum and needs settling as part of the same process.
If a lender rejects your section 99 notice outright, or drags out collection without explanation, the next step is a formal complaint to the lender itself, followed by referral to the Financial Ombudsman Service if it goes unresolved within eight weeks.
FOS decisions in this area commonly check whether the contract terms were clear, whether the customer was properly told about their termination options, and whether any charges applied were fair and calculated correctly. One published decision shows the Ombudsman recalculating a lender’s shortfall figure after finding the original sum did not follow the section 100 formula correctly.
If you suspect your original finance agreement itself was mis-sold, that is a separate question from terminating under section 99, and it is worth checking. Our site finds your car finance agreements for free in under 60 seconds, with no need to dig out registration details or old lender paperwork yourself.
The free check simply establishes whether you have a claim worth pursuing. From there, eligible cases are referred to a partner law firm that handles the claim on a hands-off basis, which suits anyone who wants the legal side managed rather than tackled alone.
I have seen the same two mistakes come up again and again: owners who hand the car back without ever putting anything in writing, and owners who assume the lender’s stated “settlement figure” is the same as the section 100 sum, when it is often far higher. If you are also wondering whether the finance itself was sold to you fairly, our free check is a quick way to find out.
— Jake
If your section 99 termination is done and you are left wondering whether the original agreement was fair in the first place, you can use a free check service that locates your finance agreements and flags anything that looks like mis-selling. This suits anyone who suspects they were overcharged on commission or never had the finance terms properly explained, and wants a law firm to take the claim from there.
Start with the free agreement check and we will let you know what happens next.
For verification, go to section 99 and section 100 of the Consumer Credit Act 1974, the Citizens Advice guidance above, and Financial Ombudsman decisions for how disputes get resolved in practice.
This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.
Section 99 applies to agreements already running, not to cancelling before delivery, so if the car has not arrived yet you should check the dealer’s own cancellation terms instead. Some agreements include a separate cooling-off period, but this varies by contract and lender rather than being a fixed statutory rule for undelivered goods.
Voluntary termination under section 99 is the main statutory route for regulated hire purchase and conditional sale agreements, letting you hand the car back before the final payment. You may also settle the agreement early by paying it off in full, or clear the balance through a private sale or part-exchange.
A short cancellation window can apply to some agreements arranged at a distance or under certain consumer credit rules, but it is not a universal right that covers every hire purchase deal. Check your specific agreement documents, since the terms and any cooling-off period vary by how and where the finance was arranged.
Section 99 applies specifically to regulated hire purchase and conditional sale agreements, not to personal contract hire, which is a rental arrangement rather than a finance agreement building towards ownership. Ending a hire agreement early depends on the terms of that specific contract, so check it directly with the leasing company rather than relying on section 99.