Voluntary Termination of HP - Question

[cervinia]

Hi,

I am 2 and half years into a 4 year agreement with regards to my car. Basically the car at the moment is worth £3000.00 less than I owe under the agreement. I have estimated that by the end of the agreemant, the vehicle will only have a value equal to the Balloon payment that is due. So for the next 18 months as I have zero equity, I will be effectivley Hiring the car at way above Contract Hire rates, having effectively already done this for the last 30 months.

I blame this on the very high intrest rates that the manufacturer's finance arms charge and to get out of this agreement I am thinking of Voluntary Terminating the agreement as I completed well over 50% of the payments all of which have been paid on time.

The one nagging doubt that I have is, will this have an adverse effect on my Credit Rating?

[bakedalasker]

I'm afaid a voluntary termination (VT) will leave a "coded mark" on your credit file. This mark will be seen by all finance houses when they do a credit search on you. How they judge it will totally depend on the house itself.

I have heard stories of someone having a VT on their file but being pushed aside by a certain house because of one reason or the other. I know one companies VT is totally ignored. Suppose it is down to the actual house who you apply to.

Whatever, a VT leaves its mark.

[Karnevil]

Voluntary Termination of Hire Purchase and Conditional Sale Agreements


also look at Section 99 of the Consumer Credit Act 1974

[Karnevil]

also have a look on MSE

Voluntary Termination of HP - MoneySavingExpert.com Forums

theres a few others on their that have asked a similar question about the VT affecting credit ratings

A voluntary termination is a flag that will appear next to the account on your credit file (not in the payment history). This is not a problem, it simply tells any potential lender (though I doubt many if any would look too closely at a VT) what you did, you voluntarily terminated the agreement. This is NOT (and won't be seen as) adverse as it is done under the terms of the agreement.

Be cautious though, as sometimes HP agreements terminated like this are recorded (wrongly) as a voluntary repossession. This would appear in the payment history and would be treated as adverse.


If you do return a HP car under the terms of the agreement do check shortly afterwards (allowing 30ish days for the account to be updated on your credit file) that it has been registered as a Settled (Voluntary Termination) and not a Voluntary Repossession. If it has been registered wrongly contact the finance provider and the Credit Reference Agency (or probably all three!).

[Karnevil]

Cervinia, have you found anything more out about this ? Please try and keep us updated, sharing your experience with others can really help peeps in a similar position....and hopefully if you have any difficulties someone will be able to help.
Karne
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