Cancel or Terminate HP Finance

Before doing anything, locate your hire purchase agreement and check:

• The total amount payable (the full cost including interest and charges)
• How much you have already paid in total
• The date you signed the agreement (to check if you are within the cooling-off period)
• Any early termination clauses or fees mentioned
• The finance company name and contact details

Under Section 63 of the Consumer Credit Act 1995, you have a statutory right to voluntarily terminate a hire purchase agreement once you have paid (or pay up to) half the total hire purchase price.

The “total hire purchase price” includes all interest and charges — not just the cash price of the goods. Check the agreement carefully for this figure.

You have two routes depending on timing:

• Cooling-off period (10 days): If you signed the agreement within the last 10 days, you can cancel with no penalty. Write to the finance company immediately stating you are exercising your cooling-off right. Return the goods.
• Voluntary termination (Section 63): If the cooling-off period has passed, you can terminate once you have paid 50% of the total HP price. You return the goods and owe nothing further (subject to reasonable condition — see Step 6).

Write a formal letter or email to the finance company. Include:

1. Your full name and address
2. The HP agreement number
3. A clear statement that you are exercising your right to terminate under Section 63 of the Consumer Credit Act 1995
4. Confirmation of the total HP price and the amount you have paid
5. If below 50%, state you are making a balancing payment to reach the threshold (and include it)
6. A request for written confirmation of termination

Send your termination letter by registered post so you have proof of delivery. Keep the postal receipt and tracking confirmation.

If you also send by email, that is fine as a backup, but registered post is the gold standard for evidence. The termination takes effect when the letter is received by the finance company.

You must return the goods (typically a vehicle) to the finance company. The goods must be in reasonable condition, meaning normal wear and tear is acceptable.

• Take dated photos of the vehicle from all angles before returning
• Document the mileage and any existing damage
• Get a written receipt confirming the vehicle was returned and its condition

After termination, request your CCR credit report to check that the HP account is reported correctly. It should show as voluntarily terminated, not defaulted or in arrears.

If the finance company has reported it incorrectly, file a CCR amendment immediately.

Finance companies sometimes try to charge excessive “damage” or “excess mileage” fees after voluntary termination. You can challenge these if:

• The charges are not specified in the original HP agreement
• They exceed what is reasonable for normal wear and tear
• The “damage” assessment was not carried out by an independent party
• They are trying to charge you beyond what Section 63 allows

Write a formal complaint disputing the charges and reference the Consumer Credit Act 1995.

If the finance company refuses to accept your termination, charges you unfairly, or reports your account incorrectly on the CCR, escalate to the Financial Services and Pensions Ombudsman.

You must make a formal complaint to the finance company first and wait for their Final Response Letter (or 40 business days, whichever comes first) before filing with the FSPO.