What’s the best way for me to get out of my car hire purchase agreement?

26 June 2018


Please can you give me some advice on settling my car loan? At the moment, I have two loans: the mortgage on my house and the hire purchase agreement on my car. I was very excited to get a three-year-old Range Rover Evoque with a £5,000 deposit and monthly payments of £438. I can afford the payments but I have realised that I hate having two loans. I don’t use the car often enough to justify the costs, but it is impossible to get out without paying at least half of the total cost of the car and the entire loan at 9.2% per year. Plus, my car insurance is an extra £2,000 a year. I am about to receive a bonus from work, so I want to get rid of the car debt and buy a cheaper car outright, but how should I do it?

Do I pay the £25,000 loan, so I own the car, and then sell it? I have calculated I would get a cheaper car and be left with £7,000 to £10,000 cash if I do this.

Or do I just pay off the £10,000 I owe on the loan and return the car?

I would then have £18,000 but need to buy a cheaper car.

Alternatively, I could keep the car and continue making the repayments for the remaining year. I could then use my bonus to pay off part of my mortgage and at the end of the year I would own the Range Rover.

I feel like the first option is the best, but would appreciate a second opinion.



Paying off the full £25,000 of finance, owning the car outright and trading it in for a cheaper model is the option I would recommend. However, you should establish what the early repayment fee is if you do this and get it confirmed in writing.

It’s also worth asking if the garage will give you a better deal on a replacement vehicle as part of the arrangement.

The third option is definitely a no-no as you’ll be paying the £438 each month, and the hefty insurance premiums, and the car will depreciate further in value. You’ve admitted that you hardly use the car, so why prolong matters?