A few months ago I purchased a car from a dealer with the car finance company.

They lent me £6500 and I paid a £1000 deposit as the car I wanted was £7500.

when I took out the agreement I was in part time employment.

My mum then got diagnosed with COPD ( lung disease) and heart failure and needed me to be her carer.

I left employment and informed the company of that.

The company then did another budget planner and realised with their payment I was in deficit each month because my only income is currently benefits.

My mum is now terminally ill doctors aren't sure how long she's got left with us.

I want to give the car back to the finance company as I'm in such a dire situation being in deficit I dont know how much longer I can sustain things. Im a single parent, if it was just me I wouldn't really care about going without but my kids kind of need me to provide.

Im really scared about the company selling the car for less than its worth and leaving me with a vast amount of interest.

It is a pretty silly percentage but as my credit rating is poor and my plan was to try for a mortgage in a few years I thought it would be a good way of building back up my credit as seeing as I could afford it at the time didn't see an issue.

Big issue now though. Damn life.

Any advice for me ? ( already know Im an idiot so not really much need to go there:| ) thanks in advance.

Look at the possibility of Voluntary Termination, more info can be found in the Consumer Credit Act 1974, s99 onwards

yes voluntary termination time...

do not let THEM use Voluntary surrender!!

Section 99 of the Consumer Credit Act gives the debtor the right to terminate a hire purchase agreement,

simply by giving written notice of termination.

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The right to terminate applies at any time before the final payment becomes due, unless the creditor has already terminated.

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contrary to the line taken by many finance companies,

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the debtor need not have paid half the total amount payable,

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and nor do they have to pay any arrears,

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before exercising the right to terminate.

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Sections 99 and 100 set out the debtor's liability on voluntary termination. The sections are complex,

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but their main effect can be summarised in brief as follows.

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.If the sum of payments made and arrears before termination exceeds 50% of the total price,

than the debtor is only liable to pay the arrears.

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Otherwise, the debtor is liable to pay half the total price, less any payments already made.

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so the debtor can terminate at any time if he has reached the 50 % mark

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the debtor can terminate at any time before the 50 % mark but would be liable for payments still to reach the 50 % mark,

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does not matter if the account is in arrears at the time or request to do a voluntary termination.

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you need to specifically nail them down that this is a VT and NOT a VS [volutary surrender].

dont get caught out!!

take extensive photos of the car inside and out

and underneath and in the engine compartment ALWAYS.

if they try and charge a repo fee or collection fee they cannot:

173 Contracting-out forbidden.

(1)A term contained in a regulated agreement or linked transaction, or in any other agreement relating to an actual or prospective regulated agreement or linked transaction, is void if, and to the extent that, it is inconsistent with a provision for the protection of the debtor or hirer or his relative or any surety contained in this Act or in any regulation made under this Act.

This term is covered by the above section of the CCA 1974 in that it breaches this:

99 Right to terminate hire-purchase etc. agreements.

(1)At any time before the final payment by the debtor under a regulated hire-purchase or regulated conditional sale agreement falls due, the debtor shall be entitled to terminate the agreement by giving notice to any person entitled or authorised to receive the sums payable under the agreement

In other words nothing can stop you voluntarily terminating.

The only charges you must pay are the ones contained in the legislation and itemised in section 101, the charge mentioned is levied after the agrement is terminated and is void in any case. All it means is that no one will collect the terminated car(their car), well that is ther problem it is no longer yours , your attachment to the car has been terminated.

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although dependant on the way your agreement is written, they can charge excess mileage

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this has been accepted at county courticon level, but afaik has not been tested in a higher court

..

..............example letter..ADAPT TO SUIT.............

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You must vt under s99/100 cca1974. do not sign any of their forms, or agree to pay anything.

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The car has just to be in reasonable condition for its age.

If you have paid in excess of 50%,

with no arrears there will be nothing to pay.

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Send them the following letter,

they MUST action your request,

you should endeavour to be present at the vehicle inspection---

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VOLUNTARY TERMINATION OF AGREEMENT UNDER S99/100 CCA 1974

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Account No: (xxxxxxx)

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Dear Sir,

I am writing to notify you that I am exercising my right to terminate the above Agreement

under Section 99 of the consumer credit act1974.

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You will understand that the aforementioned section permits the debtor to terminate the agreement

at any time before the last payment is due.

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There is no restriction regarding the exercising this statutory right,

particularly none in respect of any perceived arrears or monies due on termination

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I understand that I shall be liable to you for the amount calculated under the formula in Section 100

of the Consumer Credit Act 1974.

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**As I have/have not paid more than the amount calculated under the formula in Section 100 the amount due is £XXXX/zero.

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The above agreement will be terminated 14 days from the date of this notice.

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Please send me details of how the vehicle can be returned to you.

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You will be aware that statute prevents you from levying a charge for the recovery of this vehicle;

guidelines also state that if you require me to deliver this vehicle

it must be no more than a short (reasonable distance) from my registered address.

.

Please confirm receipt of this request in writing within 7 days of receipt.

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-Yours etc...

..

Hi. Thanks for that. I have printed it off and going to send today

but needs a little help with the calculations.

I asked them for the amounts and this is what they told me.

Starting balance £14,32 0

Deposit £1000

Balance £13,320

Payments made to date £1803.36 pence

(Sorry I have dyslexia )

Outstanding balance £ 11.916.96p

50% of amount financed = £6660.00

Less payments made = £1803.36

Total to pay = £4856.64

Hopefully DX can clarify if within these calculations, there is any allowance fir interest rebate.

It is 50% of the TOTAL amount payable under the agreement and also includes any deposit. You can find the exact figure in the termination clause on your h.p. contract. Add up what you have paid plus any deposit. If you are a little bit short of the amount required put a cheque in with your termination letter. One thing to watch out for - add-on products such as GAP or CPI are usually done on a separate CREDIT agreement i.e. not HP and will still have to be paid for.

Section 94 of the consumer credit act deals with early settlement and gives debtors the right to discharge their indebtedness at any time. The amount that the debtor must pay is is the amount payable under the agreement minus any rebate allowable under Section 95. This rebate is based on an acturial formula and is highly complex.

In HP agreements one can return the goods after 50% of the total amount payable under the contract has been paid, but watch out for any default charges and as said above, any PPI etc that is actually paid up front to the insurer by the finance company.

You can VT at any time, even if in arrears in certain circumstances.

The 50% rule is an upper limit on liability under the agreement,

if the 50% point has not yet been reached then the 'debtors' liability is limited to (50% - amount already paid ) + any arrears outstanding at time of VT + any extraordinary charges eg poor condition/damage to vehicle.

eg if agreement is valued at £15,000 total of which £1500 was paid as a deposit

the 50% point is reached when the debtor has paid £6,750 of monthly payments.

Assuming no damage to vehicle incurring costs on the same agreement as above

if the debtor had paid £2,000 in monthly payments before choosing to VT they would be liable for £4250 upon return of the vehicle.

50% of amount financed = £6660.00

 

Less payments made = £1803.36

 

Total to pay = £4856.64

 

 

 

Hopefully DX can clarify if within these calculations, there is any allowance fir interest rebate.

Thanks for that. I sent a recorded letter was signed for on the 30th. No response. Got letter today saying I'm in default. They have totally ignored my request to cancel the finance

probably crossed in the post

let it run

Finally received communication from the car finance company

Total balance : £4916.80

arrears balance : £239.84

This notice is given in compliance with section 86b 2a of the consumer credit act 1974 because you have fallen behind with your payments under the agreement.

As per the terms of your agreement, you must pay all instalments by the due date. If you have not already forwarded payment, please contact us to discuss the state of your agreement. If you want more information about which payments, you failed to make please get in touch with us. We are required to give you this information within fifteen working days of receiving your request for it.

so they've sent a default notice

did you not send the VT letter then?

Hi. Yes I did.

I sent the letter that was posted and they came and collected the car.

Which has been sold as I got a tax notification from the dvla

section 86b 2a of the consumer credit act 1974

is a notice of sums in arrears

can you scan up that letter and the one ref'd in post 4

Checked my credit record, its showing I owe nearly 5k. They haven't told me what they got for the car or deducted it from the amount I owe. where do I go from here?

that's sounds about right

now action 12 please

I bought a printer but couldn't figure out how to connect it to the internet to upload any files so I returned it. I copied and pasted the letters word for word , and added my details.

i take it you have 2 usernames here too.

it would be really nice to see these letters they've sent you

photo or something?

dx