Question: Can You Pay Off Your Hire Purchase Early?

Yes.

If you’ve already repaid more than 50 per cent of your Personal Contract Purchase (PCP) or Hire Purchase (HP) finance you can return your car through what’s called a Voluntary Termination agreement.

There are, however, a few other ways to end your finance early…

Can you pay off car finance early?

With most loans, if you pay them off sooner than planned, you pay less in interest (assuming it has no prepayment penalties). But that may not be true for your car loan. Put simply, it’s because those lenders want to make money, and paying down the principal early deprives them of interest payments.

Is there a penalty for paying off a loan early?

If the terms of your loan include a prepayment penalty clause, then you’ll be penalized if you pay off your debt early. Typically, a prepayment penalty fee is a percentage of your loan’s total remaining balance.

Does paying off a loan early hurt credit?

Installment loan accounts affect your credit score differently. And while paying off an installment loan early won’t hurt your credit, keeping it open for the loan’s full term and making all the payments on time is actually viewed positively by the scoring models and can help you credit score.