What Car? Q&A - Can I give my car back?

Q: I bought a car on a five-year purchase agreement. I had previously bought two new cars on similar agreements, and part-exchanged them for this one after keeping them for only short periods, rolling the finance over.

The car cost £6500, and when the agreement is fulfilled I will have paid slightly over £13,000, as the payments are £215.97 per month. A change in circumstances means I am unable to afford the monthly payments.

I have never missed a single payment in the three years I have had the car. What are my options? I would like to give the car back to the finance company and lose what I have left to pay on the car. If I did this, would it have any legal implications?
James Pardew

A: The best way to find out what options you have is to check the terms of the finance agreement. It should explain what you can do if you want to end the agreement earlier. There may be an early settlement fee to pay.

Unfortunately, because you have rolled over finance from previous agreements, you are probably paying a very high interest rate on this loan.

With respect to legal issues, any regulated loan agreement is covered under the Consumer Credit Act. It allows you to hand the car back, and walk away, after your payments have equalled 50% of the total amount payable under the contract. Contact the finance company which organised your loan for the exact amount.

You do have other options - you may be able to settle your agreement by selling the car, privately or to a dealer, and paying off the outstanding settlement figure. If you are lucky, you might be able to sell the car for more than the settlement figure, and make some money. Contact the finance company for a settlement figure and investigate the value price of a car.

You will get more money selling it privately, but this may take longer than going to a dealer. If you do want to sell the car, you should inform the finance company first, who may require you to settle the loan agreement before your transfer ownership.

If you'd like a guide on the current value of your Megane, you can use the valuation page of our website by clicking here.