If you are unsure what type of agreement you have, look at the top of the first page of your original agreement. The type of agreement you have will be written there.  If you do not have the agreement, contact the finance company and ask them to confirm what type of finance you have. 

Hire purchase agreements are most commonly used for car finance, but some retailers use them for furniture or other household goods

If your hire purchase agreement is regulated by the Consumer Credit Act and your creditor has not issued a default notice, you are able to cancel it and return the goods.

To cancel you need to:

Write to your creditor, sending your letter by recorded delivery and keeping a copy for yourself. You should state the following:

• State you are exercising your right to terminate your Hire Purchase Agreement under section 99 of the Consumer Credit Act 1974
• Ask for confirmation of the amount that will remain to pay, calculated under the formula in section 100 of the Consumer Credit Act 1974
• Ask for details of how you should return the goods

If you have paid more than half of the total debt, you are only liable to pay any current outstanding arrears.

If you have paid less than half of the agreement, you are liable for half of the total agreement amount, plus any outstanding arrears. This also depends on the condition of the goods you return.

The creditor should not refuse the request to end the agreement, even if your payments are in arrears. If they do refuse, look on the Direct Gov website for further advice.

If a default notice  has been issued and arrears not repaid in time, a creditor can end a hire purchase agreement.

If they do this, you are liable to pay back the total amount owing at the time of termination minus the amount the creditor gets from the sale of the vehicle. They will normally sell the vehicle at auction.