Hire Purchase Hand Back

[woolfie]

Wonder if everyone knows that if you buy a car on hire purchase, once you have paid over half you are quite entitled to hand the car back with no additional penalties. The car must be in reasonable condidtion for age etc. but they cannot insist on extra payment even though they will try. Usually it is the 'Voluntary Terminations' department that will deal with this.

They will offer you an early settlement figure but you dont have to accept this, just stick to your guns and tell them you want to hand the car back. Trading standards are helpful and often companies will back down when you mention you have spoken to them.

The car will then usually go to auction where I am quite sure you would be able to buy it back for less than the settlement figure anyway. Oh and this should not affect your credit rating as it is perfectly above board its in the small print!!

I have sucessfully done this in Scotland and i think it is the same in England but you should check.

[jonni2bad]

That is quite right, other than a couple of minor additions....

Ending your contract early

If your HP agreement is for under £25,000, you have two ways of ending your contract early:

You can terminate an HP agreement and return the goods at any time by writing to the lender, as long as you bring your total payments up to half the price of the goods (the exact amount will be stated in a box on the front of your contract). But you will also have to pay off any credit you took out to pay for insurance. If you have already paid half, you only have to pay for any missed payments or damage to the goods (but if you have already paid more than this amount, you will not get a refund of the difference).

You should not be charged to return the goods. If under the terms of your contract you must take the goods back, this should only be to premises within a reasonable distance of your home.

You can also pay off your loan early (including any credit for insurance) and keep the goods. Contact your lender and find out how much this will cost. You will be entitled to a rebate on future charges. There are rules on how this is calculated.

Credit agreements should include examples of how much it will cost to pay early at different times.

[comanche]

Do the same rules apply to contract hire vehicles?

[jonni2bad]

I don't believe so, since you enter into a contract for services, rather than agreeing to buy the vehicle over a period of time.

I will get my google head on again...lol

[seylectric]

Does anybody know what the position is if you are in arrears?

A few years ago I was around £500 or so in arrears with a HP agreement. If I paid the £500 it would have taken me over the 50% limit. I wrote to the finance company, enclosing a cheque for the full arrears and asked them to collect the car and close the account under the terms of the agreement.

They sent my cheque back, and said that I had to pay the full amount for the vehicle as the rules didn't apply as I had defaulted. I sent them a letter telling them that I refused to pay and told them to collect the vehicle anyway. I continued to make the regualr monthly payments for the next two months, but got no reply to three requests to end the agreement and accept my payment.

I got no specific reply, just letters from a debt collection agency regarding the total outstanding amount. Eventually (and with no specific prior notification) they repossesed the car in my absence, and ever since then (3 years ago) have continued to request the full balance of over £6,000 minus the paltry amount, about £1500 I think, far less than the market value of the car) via the collection agency. I haven't had a letter in over 12 months but got one this morning asking again for over £6k.

The debt shows on my c.r. file as a default

[woolfie]

I think, and I am sure one of our legal experts will correct me if I am wrong, if you have paid over one third, they have to get a court order to reposes your car. They cannot enter your premisis without a court order at any time. However if they have your permission they can do so. Handing over your keys at the door would constitute giving your permission. My understanding of this is that they can come to your door and ask you to give them the car if it is in your drive or garage but cannot just take it. If it is parked on the street and you have paid less than a third then they can just take the car.

There are also other rules about how they must act. i.e. they cant come to your door after 9pm in the evening. If you did hand over the keys it may be that you felt under duress or threatened to do so but you would probably need an independant witmess to this, possibly a good friend who was willing to stand by you in court.

In Scotland they need a court order at any time I think!

if you google 'car reposession' you can get some more details.

[Maxie]

It called 'voluntary termination' and under the consumer credit act 1974 (which hire pruchase agreements under £25,000 are regulated by). If you have paid atleast one half of the total amount due under the agreement including all fees etc then you you are entitled to hand the vehicle back.

You would need to right to the company and tell you wish to terminate, send it special delivery, and then you will have proof when they received it. Under law your termination date is when you inform the company NOT when they get the vehicle back.

You will be responsible for all arrears etc upto that date.

If the give you any grief come back ad we'll help you!

[seylectric]

The company knew I had asked them to terminate the contract because they refused, returning my cheque.

My argument is that they were denying me the right to terminate the agreement by refusing to accept my payment of the arrears. They implied that because I had defaulted in the first place I had lost my right to terminate the agreement, even upon full payment of the arrears.

Then they claimed to have legally reposessed the car, technically correct because I refused to pay, but only because they refused to allow me to end the agreement.

[woolfie]

If you have paid over 1/3rd the company requires a court order to repossess your car.

According to 'The Site' a consumer website

"It is also possible for you to hand the goods back, but under the Consumer Credit Act you would be expected to pay half the credit originally borrowed (this would include any arrears and then an additional sum of money to bring the total to 50% of the credit borrowed).

So basically if they repossessed your car with out a court order and you had paid over one third (if the car was on your property they need a court order regardless) you would have a very good case for fighting this and as far as I can see they should have accepted your payment to bring things up to half so you could voluntarily terminate.

If you are in Scotland they would probably need a court order regardless although the law is a little unclear on this one.

I would have a word with your local trading standards on this one.

Woolfie

[BotB]

Did you send your letters recorded delivery? Kept a copy?
Did they send you a default Notice?
If you had paid more than a third of the amount repayable then they must get a court order to repossess otherwise they cannot recover anything under the agreement.
They can't have it both ways - either they repossessed your car illegally or they accepted a voluntary termination.
There has been a court case where the court found in favour of the consumer who handed back the vehicle voluntarily although the finance company claimed he had lost the right to do so because of arrears. You can read a report of the case here:
http://www.leicester.gov.uk/index.asp?pgid=6860

I think it was decided at District Judge level so it hasn't set any precedents and a higher court could decide differently. However, its interesting that the finance company didn't appeal against the decision - obviously they didn't want to set any precedents that were contrary to their interests either!

I think you definitely need to get some advice here maybe from CAB or similar. There's a host of issues arising out of this - if the car was illegally repossessed it should never have appeared on your credit reference files so there's data protection issues also. If it was illegally repossessed I think you're entitled to receive back from the finance company all the money you paid in the first place.
Go on give them a taste of their own medicine!

[seylectric]

Thanks for the help and info, will have to dig out the documentation for this and get onto it.

[jfadeyi1]

i don't no if you guys ever heard about the 'Act of seredunt'
under the consumer credit act 1974 you can apply to the county court for a time order with an offer of reduced payment if you intend keeping the good.(statutory instrument 1995 no 1877 (s.124) Act of sederunt (consumer credit Act 1974)(Amendment)1995 www.opsi.gov.uk/si/si1995/uksi_19951877_en_2.htm

[jonni2bad]

Is that definately the term?

The only information I can find on Act of Seredunt relates to the Mental Health Act in Scottish Law......

[Janet-M]

Originally Posted by Maxie

It called 'voluntary termination' and under the consumer credit act 1974 (which hire pruchase agreements under £25,000 are regulated by). If you have paid atleast one half of the total amount due under the agreement including all fees etc then you you are entitled to hand the vehicle back.

You would need to right to the company and tell you wish to terminate, send it special delivery, and then you will have proof when they received it. Under law your termination date is when you inform the company NOT when they get the vehicle back.

You will be responsible for all arrears etc upto that date.

If the give you any grief come back ad we'll help you!

I handed my car back years ago , can't remember the exact wording I used but something about evoking .It went against my credit ratings as it stated voluntarly termination on my credit file .I tried to get finance afterwards and was refused and pointed to my credit file , that was the only thing that was on it.I was informed by a company that no one would be prepared to give me credit incase I done the same again .This did happen years ago so maybe things have changed
This is one thing I would never do again and would not recommend, unless I really had no choice .

[Maxie]

Originally Posted by mjanet

I handed my car back years ago , can't remember the exact wording I used but something about evoking .It went against my credit ratings as it stated voluntarly termination on my credit file .I tried to get finance afterwards and was refused and pointed to my credit file , that was the only thing that was on it.I was informed by a company that no one would be prepared to give me credit incase I done the same again .This did happen years ago so maybe things have changed
This is one thing I would never do again and would not recommend, unless I really had no choice .

This does happen. The companies use the line that they have a duty to fairly and correctly reflect the conduct of your account on credit reference files (ha! Using the word fiance company fairly and correct in the same sentence!!!) So they file a 'voluntary termination' notice against your name. Now, car finance comanies hate the right to voluntary terminate (VT).

The VT right was actually ment for the cattle trade for a dairy farm could give back cattle that were bad producers etc - but that a long story!! By VT ing the agreement the comapny looses out on interest and because the car will depreciate in value say you had £5000 to pay on the agreement at half way, and it back, they only get £2500 at auction they say the 'loose' £2500. This is not a very good argument. They make profit even at half way (99% of the time) what they mean is they don't 'maximise income' from the customer (AKA didn't screw every penny out of you for as long as they could and make sure you paid over the odds in the long run)

[BotB]

This is one thing I would never do again and would not recommend, unless I really had no choice .

I did it a couple of years ago. I was being ripped off with a 40% interest rate. I had no problems getting another car on credit at a much better interest rate.

No, the finance companies don't like it, not because they take a loss but because they don't make the maximum profit. A VT on your credit file is NOT an adverse entry, simply a statement of information about that account - it is perfectly legal - its your RIGHT as a consumer to exercise termination at the half way point as long as you're up to date with your payments.

[seylectric]

Originally Posted by BotB

This is one thing I would never do again and would not recommend, unless I rea