Introduction

Our free letter template is perfect for people who want to terminate their hire purchase agreement with a creditor. If you wish to cancel your hire purchase agreement, download our letter template for free, insert your details and post it off. 

You are legally allowed to terminate a hire purchase agreement under the Consumer Credit Act, which is why we make reference to your rights within our free letter template to terminate a hire purchase agreement. 

It’s time to hand back the keys and end your financial obligations!

Letter Template

To Whom It May Concern

Voluntary termination of agreement

Account #: [your account or reference number]* (required)

Car make/model/registration no: [enter the car make/model/registration number here.]*. (required)

I am writing to notify you that I am exercising my right to terminate the above agreement under Section 99 of the Consumer Credit Act 1974.

I understand that I will owe you for the amount calculated under the formula in Section 100 of the Consumer Credit Act 1974.

Please send me details of how the vehicle can be returned to you.

Please confirm receipt of this request by [fax, email or letter]* (required) to me on [insert your fax number, email address or postal address.]* (required)

I look forward to hearing from you.

Yours sincerely


Downloadable Resource

The download links below take you to a Google document template where you can make a copy or save in any document format you like. Note, you may have to login to your Google account.

Download – Single (for one person)
Download – Joint (for couples)

What is a hire purchase agreement?

A hire purchase agreement, also known as a HP agreement, is a way to hire a vehicle and eventually own it once all of the repayments have been made. You do not own the vehicle until it has been completely paid off, meaning you cannot sell it or modify it during that time. Moreover, the lender could repossess the vehicle if you fail to keep up with repayments. 

Can I cancel my car finance agreement?

Everyone with a hire purchase agreement on a vehicle in the UK is legally allowed to terminate their agreement using Consumer Credit Act (Section 99). The law states that you can return the vehicle and end your repayments on the same day the vehicle is returned. 

However, Section 100 states that you may have to make a further payment when ending the agreement. Most of the time, creditors require you to have paid at least 50% of the total agreement value. If you have not paid at least half of the hire purchase agreement repayments, they could request that you pay the difference. 

For example, if your hire purchase agreement was 24 months of £100 (total £2,400) and you cancel after 10 months (total £1,000), they could ask you to pay an extra £200. 

Can I get a refund on a hire purchase agreement?

You might be wondering if you can get a refund on your hire purchase agreement if you have paid more than 50% of the contract value. 

In most instances, the answer to this is no. But because you have paid more than 50% of the hire purchase agreement value, you probably won’t have to pay any more when you cancel your car finance agreement. 

Be aware that these general rules could be changed by the terms and conditions within your agreement. While some creditors state that at least 50% needs to be repaid, some may require more to be paid back. This will not defer your right to cancel your agreement at any time, but it does mean you may need to pay more when you end the agreement. 

Always check your car finance agreement to find the details. 

How do you terminate a hire purchase agreement?

You should always request to have your hire purchase agreement terminated in writing. That’s why we have created our free terminate a hire purchase agreement letter template. Download it now and make the most of our free helpful resource. 

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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