OK - I assume the car is on Hire Purchase ? Let's work on that assumption. You have signed up for a credit agreement. Let's also assume the agreement is covered by the Consumer Credit Act and therefore what's known as Regulated Agreement (ie. amount borrowed is under £25k, if on lease terms then this will be different and I can explain further).

The letter of the law is this - is you have paid half of the agreed instalments you are legally entitled to hand the car back and walk away without any further penalty. The residual value (more commoenly known as a balloon) at the back end is there to keep the monthly payments down, you are under no legal obligation to have that as if you want to pay the whole amount off over a fixed period (known as a full payout agreement) you can do that.

If you have specifically opted for a balloon to keep the monthlies down then at the end of the agreement you have options. You can either pay the amount in full and the car becomes yours, you could vorrow money from another funder to repay the finance company and title transfers to you but you still have a loan elsewhere to pay the residual, or you can hand teh car back. Be careful - if you do hand the car back (if the option is even available) there will be return conditions attached. They will accept fair wear and tear but any excess milage (if built in to the agreement) will be chargeable. To be honest, this usually applies to Contract Hire agreements only.

Any other questions I'll be happy to help.