Thread: HP Crisis

I had a Mercedes prior to this one but that was on lease and so after 4 years I went back to the showroom and dealt with the same salesman and told him that I would like to part exchange and purchase the B-Class but on straight finance so that when I have finished paying for it then I can own it and keep it for a while. He came back with prices and so 3 years would be too much per month and so he said 4 years was the longest he could go and this amounts to £395 per month which was a squeeze but I was able to afford it so I went ahead with that deal. At no time did we discuss anything else.
The day I took the car in to change over, she was with me and so the salesman printed off the contract and asked me to sign to sign it and I handed over the deposit, documents to the car and keys. He gave me a copy of the contract. I did not read the contract which I have to take responsibility for and regret it so much.
Therefore, on 3 March this year it will be 4 years and the final payment for the car will be paid. I have been counting down since last year because, as you know, the financial downturn in the economy has affected almost everyone and so it has not been easy keeping up with the payments but I have done so. There were a few times when payments were returned unpaid but these were cleared in no time and so there are 2 more payments to go and there are no arrears on the account.
However, last October they sent out the yearly statement and the outstanding balance stated just over £8,000 which puzzled me. I just couldn’t understand if I am supposed to be finishing the payment in March this year, how can there be an outstanding balance of over £8k. I rang Mercedes to find out what was going on only to be told that that is a balloon payment after the final payment of the contract. I was shocked almost to death. I explained that I did not know about a balloon payment and this was not part of my negotiations with the salesman at the time and this should have been pointed out to me because had I known about this vast balloon payment I would not have driven off the forecourt with the car. I would not have agreed to such a deal. The Mercedes personnel told me that the onus was on me to have read the contract and I know but I just took it for granted that because I had dealt with them before and got exactly what I negotiated then, now would have been no different. The fact that only 2 months to go for final payment and I am just trying to sort this out shows that I was not aware of this. I never looked at the contract until I was sent the final statement in October.
I feel sick because I have paid almost £20,000 to Mercedes already. Now they explained that the balloon means that on 3 March I can hand over the car to them, pay them the £8k+ or continue with 3 years monthly payment of £247. I am unable to do the first two options so I contacted them and told them that I will go for the refinance of 3 years. They then wrote a letter on 15 January stating that they are not going to accept my offer to keep the car because of ‘poor’ payment record and so on 3 March after making the final payment they are looking to take possession of the car.
We have written to them expressing our disbelief and disappointment with them considering we have paid them almost £20,000 and there are no arrears on the account and when the payment was returned unpaid in the past, it was most of the time down to the bank making an error either on their part or on our part but at the end of the day as soon as we were notified I would call them up and pay them over the phone.

Do I have any rights here or have I just paid out almost £20,000 as an expensive way of hiring a car for 4 years?

I am afraid a balloon payment is the normal way of doing car pyments what they bank on is you buying another car at the end of the term and trading your old one in. If you times your monthly payments by 48 + the interest you will see that it does not add up to the total amount of the purchase price of the car. We have a Jaguar and the dealership keep sending us tempting offers to swop it I delete them before my OH can read them because they could sell him sand in a desert. When you read on the offer is not so tempting when you see the final payment. I cant offer any legal help but I do wish you luck, it must be an awful position to be in.

have you confirmed everything on the agreement ref this baloon payment

Originally Posted by postggj

have you confirmed everything on the agreement ref this baloon payment

I dont understand this question?

What post is asking is does your agreement (the document you signed) clearly state that there is this final "balloon" payment at the end of the term of the agreement?

This is one of those situations where it is probably going to help if you can post up a scan of your agreement for people to take a look at. Remove personal details, but leave the figures in.

Originally Posted by IainHL

What post is asking is does your agreement (the document you signed) clearly state that there is this final "balloon" payment at the end of the term of the agreement?

This is one of those situations where it is probably going to help if you can post up a scan of your agreement for people to take a look at. Remove personal details, but leave the figures in.

The balloon payment is there in the small print but as I have stated before, I did not read the Agreement and I certainly did not know about this balloon payment because it was not part of my negotiations, neither was it pointed out to me at the outset or I would not have bought the car.

This was only brought to my attention when I received the final statement and I noticed the outstanding balance and called the Finance Dept of Mercedes.