If you terminate a credit contract before the lender has the option to share account information with credit agencies, it may not be displayed in your credit report. In the event of termination of the credit contract, the consumer is still required to pay in another way for the goods (vehicle), unless the related contract has a separate right of withdrawal or withdrawal and must therefore find another source of financing. In the case of financing applications such as purchase-lease or conditional sale by withdrawal and repayment by alternative loans, the consumer effectively pays the entirety of the merchandise (plus a few interest), so that ownership of the vehicle is transferred from the original lender to the customer. Just as you can prematurely terminate a PCP agreement, you can also terminate an HP agreement prematurely. As a PCP, you must have repaid 50% of the total amount of financing. However, since no «balloon payment» is included in the total amount of financing, you usually reach the 50% repayment rate halfway through your monthly repayments. If you buy a new car on a rental credit contract, the financial company will pay the garage for it. They pay the money in increments to the financial company, with interest. It is important to remember that the voluntary termination of your car financing contract will not be refunded. So if you paid 65% of the total amount of financing, you will not have repaid the 15% more you paid. This is called the «right of withdrawal,» which entitles you to a cooling-off period, as permitted by the Consumer Credit Act of 1974. This allows consumers not to lock themselves into unwanted financing schemes that could easily be avoided. If the product is not used, you should be able to terminate the credit contract at no additional cost, except for any down payment you may have paid, which is unlikely to be refunded.
In addition to repaying 50% of the total amount of financing, you must also have taken good care of the car, which means that there is no other damage than general wear. If you want to know exactly what is considered an acceptable condition, you should refer to the fair wear and tear guide issued by your financial company. To protect yourself from possible damage, you should take pictures of the car as of date when you return it. Use this letter to inform a creditor that you want to terminate a credit contract before it is executed.