Its not the garage he will need to give it back to, it's the finance company. I doubt very much the garage would buy it back from him.
There is a half way agreement but your friend is a good year away from that so i dont think that is an option.
Is he behind on payments? And the car has just decreased in value. If he gives the car back from my knowledge this is what will happen, The finance company will sell the car, often for much less than what it is worth, they mostly go to auction. What ever the car sells for will be taken away from the balanced owed ( often you will have fees as well so that makes the balance more cause they add it on ) your friend will then be responsible for the remaining balance, and they will chase you for it.
It happened to a friend of mine a few years ago. She got loads of letters, got a court date, she didn't turn up, The court ordered a repayment plan. She never made a single payment, she got maybe 2 or 3 letters after that saying they would go back to court, but after that she's never heard a thing from them and that was about 3 years ago i think.
I would tell your friend to think long and hard about his credit rating, it will stay with him for the next 6 years. You never know what might happen in that time. He could try and sell the car himself, he would probably get a bit more for the car but it wont be anywhere near what he's owes. He could then pay that money to the finance company and arrange a new payment plan extended over a longer time maybe to lower the repayments of the remaining balance. He will have to look into this more as I'm not 100% sure how it works. I know I've had a conversation about this with someone who had done this, but i cant remember if she paid the balance of the loan there and then with the cheques from the person that bought the car from her. I know the buyer had to make out the bank draft in the name of the finance company. There is something in the back of my head saying you cant do this, sell a car on with finance still outstanding on it even if you could arrange something with the loan company, cause if you then never carried on with the payments the car could be taken from the new owner. Maybe someone else on here will be able to help with that part that I'm unsure of.
The only other option left is to just give it back, get the bad credit and deal with it. He'll have to go through all the letters and court dates ect. And just because my friend never heard anything else back from them doesn't mean he wont.
Hope e manages to get things sorted out what ever he decides.