When it comes to purchasing a car, many people opt for a conditional sale agreement, also known as a hire purchase agreement. This type of agreement allows you to pay for the vehicle in installments over a set period of time, with the condition that you do not fully own the car until the final payment is made.
However, what happens if you find yourself unable to continue making payments on the car? This is where voluntary termination comes in.
Voluntary termination is a legal right that allows you to end a conditional sale agreement early, without penalty. This means that you can return the car to the finance company and walk away, provided you have paid at least half of the total amount due, plus any other expenses such as fees or interest.
It is important to note that voluntary termination is only available for conditional sale agreements, not for personal contract purchase (PCP) or personal leasing agreements. It is also only applicable to private individuals, not to businesses.
If you are considering voluntary termination of a conditional sale agreement, there are a few things to keep in mind. First, you cannot simply return the car and walk away – you must formally terminate the agreement with the finance company. This typically involves completing a Voluntary Termination form and returning it to the finance company.
Secondly, while voluntary termination will not negatively impact your credit score, it may still be noted on your credit report for a period of time. This could potentially affect your ability to obtain credit in the future.
Finally, if you have any damage or excessive wear and tear on the car, you may be liable for additional charges. It is therefore important to take good care of the vehicle and return it in good condition.
In summary, if you find yourself unable to continue making payments on a car purchased via a conditional sale agreement, voluntary termination may be an option to consider. Just be sure to understand the conditions and potential consequences before making a decision.