Hi Carol.

What is the arrangement for your existing car? Do you own it?

Will you create any kind of debt if you hand it back?

You can use credit during a trust deed, though no allowance will be made to repay it (so for many people the risks will greatly outweigh the benefits).

Thank you for your response. My car is on a hire purchase agreement and is not finished for another 18 months. Given the low mileage I have worked out that if I hand it back the value of it will not fall short of the loan (balance to pay is £3,888 and the value of the car is between £3,500 and £4,000). I was hoping that if I move forward with this I will neither create a debt or receive money back. Wishful thinking probably but I think this is the only way that would be acceptable. The only other concern is that the lease car will probably cost around £80 more than my current HP arrangement but will be taken straight from my wages.

Hi Carol.

You'll need to be careful on the valuation of the car. If you hand it back there will likely be extra costs followed by an auction sale at a relatively low price. You might get lumbered with a significant new debt.

You may also need to consider asking your trustee whether they'll allow you to add an extra £80 to your trust deed budget to cover an increased car payment. Given that the car is still relatively new there may be some resistance to this, but I suppose there is no harm in asking.

Hi are you far enough in the hire purchase agreement to voluntary terminate , i think if you have paid more than 50% on hire purchase this is an option just to hand the car back . Check your agreement.

Matam2k is correct - as long as the car is in reasonable condition then you can hand it back and walk away without penalty once you have paid half of the total amount payable under the agreement.