Paying for a car on hire purchase or PCP

Many people pay for a car or van over a few years, through hire purchase or a personal contract purchase (PCP). The law gives the person paying some rights along the way. They cover withdrawing from the credit, ending the agreement early and falling behind with payments.

Hire purchase and PCP

The Financial Conduct Authority (FCA) names Personal Contract Purchase as a kind of hire purchase agreement. The rights below come from the Consumer Credit Act 1974, and they apply to a regulated hire purchase or conditional sale agreement.

The Act calls the person paying the debtor, and the lender the creditor. It defines the total price as everything the debtor pays under the agreement, including any payment to buy the car at the end. Penalties and damages for breaking the agreement are left out of it.

Withdrawing in the first 14 days

Section 66A lets a debtor withdraw from a regulated credit agreement without giving a reason. To withdraw, the debtor must tell the creditor, by speaking or in writing, before the end of the 14 days. The 14 days start the day after the agreement is made, or later, for example the day after the debtor receives their copy of it.

After withdrawing, the debtor must repay the credit and the interest on it within 30 days of giving notice. On hire purchase or conditional sale, once that sum is paid in full, the car passes to the debtor on the same terms as if they had not withdrawn. The right does not cover an agreement for credit of more than £60,260.

Ending the agreement early

Section 99 lets the debtor end a regulated hire purchase or conditional sale agreement at any time before the final payment falls due. The debtor gives notice to whoever is entitled to receive the payments. Anything already owed before the agreement ends is still owed.

What ending early can cost

Section 100 sets what a debtor has to pay on ending early. Half of the total price is the starting point. The debtor pays the amount by which that half is more than the sums already paid and already due.

The agreement can set a smaller payment, or none at all. If the debtor has not taken reasonable care of the car, the amount goes up to cover that. A court can order a smaller sum where it would equal the creditor's actual loss.

If payments are missed

Section 90 helps a debtor who falls behind after paying a third or more of the total price. While the creditor still owns the car, the creditor can take it back only with a court order. That protection ends if the debtor has ended the agreement themselves.

GOV.UK suggests speaking to a debt adviser for help choosing how to deal with debts. It points to MoneyHelper for free debt advice services, and Citizens Advice has its own guidance on dealing with debt.

Checking the firm and complaining

The FCA says almost all firms that provide financial services in the UK must be authorised or registered by it. Anyone can look a firm up on its Financial Services Register. The FCA says to avoid dealing with a firm marked "No longer authorised" or "Revoked".

The Financial Ombudsman Service asks people to complain to the financial business first. It is a free service, set up by Parliament in 2001, and it investigates complaints about financial businesses.

The FCA has a compensation scheme for some people who used finance for a car, motorbike or van between 6 April 2007 and 1 November 2024. In October 2026, the FCA's page said parts of the scheme were suspended after a legal challenge. The challenge was due to be heard in February 2027.