Dont Have a loan to buy a car buy it on HP

[rdm2006]

Hi i have just come across this forum and although this is now too late for me to do anything about it, i wanted to warn others.

 

Some time ago now my car was parked outside my house and some idiot came speeding down the road and hit my car pushing it into the garden of my neighbour, hit my neighbours car pushing it into the car of their other neighbour and then careered across the road and hit the side of another car.

 

we heard the noise and got to the front door just in time to see the driver and his passenger get out of their car and run.

 

The police caught up with them (the passenger had not been wearing a seat belt and was found rather stunned wondering around the playing fields behind the houses across the road) i am glad he was not hurt too much but wow talk about instant justice . The driver was caught elsewhere and it took 5 policemen to hold him down :o.

 

We were asked to give statements and to go to the police station in 2 weeks to see if he had submitted insurance details. We did this only to be told that they could not give us his details as he was arrested for "other" reasons, they would not even tell us if he was insured or not!!!

 

Anyway to cut a long story short we were eventually given the insurance details although we had already begun a claim through our own insurance.

 

our car was a complete writeoff and we were offered £2500.00 pounds as this was the "Glass" value.

 

We had purchased the car by having a personal loan and still had £2500 to pay i mentioned this to the insurance company and was told had it been on HP then i could claim that but as it was a personal loan i could not.

 

how unfair is that?

 

The driver was charged £100 x2 for leaving the scene one for me and one for my neighbour and we were left with either paying off the debt and no car or using the money to buy a new car (which would not be enough to buy me a car of similar spec) and having to pay off the debt myself.

 

is this justice? i think not.

 

edit - a point i think i should also make is that i live on a very wide road with wide pavements which have been marked to park on so my car was actually not on the road but parked on the pavement.

 

Before anyone tells me i should have had gap insurance - when i first brought a car (and here is where i expose my age) gap insurance was unheard of (in fact you could get into trouble for having double insurance) and believe it or not each time i have purchased a new car no one has advised me (until recently) that i could buy insurance to cover this gap which i have now done.

[Mossycat]

I think you were given some wrong advice there.

 

First off, the difference between a personal loan and hire purchase (HP) is that in a personal loan the money is what is lent to you so if you choose to buy a car with it the car belongs to you outright, HP is different in that the car belongs to the company who lent you the money until you make the final payment (you are hiring it from them until you make the last payment and that's the point you purchase it).

 

For a person to insure anything there must be 'insurable interest', for example I can insure the life of my partner because if she dies it will have an affect on me but I cannot insure your life (because if you die that would have no affect on me). As an aside insurable interest goes back to the days when insurance first started and people 'gambled' on the lives of others (it was quite common for wealthy merchants to insure the life of a sea captain and then pay someone to throw him overboard whilst at sea and then claim the insurance).

 

So the test is do you have insurable interest on a car under HP, answer YES, ergo you get the SAME benefits as you would under a personal loan.

 

In your case you purchased a car, that car had a value, usual practice is to refer to Glass's Guide, Parkers, Blue Book or whatever and use the value given as the basis for a settlement offer. Whether you are on HP or personal loan that does not affect the value of the car, it is worth what it is worth.

 

It is quite usual for a car to be worth less than the outstanding finance because of various factors (depreciation, interest etc etc). You were only ever entitled to claim for the value of the car and nothing else.

 

You did mention that GAP insurance wasn't around when this happened so I am guessing it was quite a long time ago, but never the less you were wrongly advised at the time.

 

Be warned if you use HP to buy a car then if you fall behind with the payments the car can be taken from you very quickly because it is not your property, the legal owner (the loan company) simply exercise their right to take back what is theirs, under a personal loan it works differently, you would not lose the car until legal action and then possibly not at all.

 

Mossycat

[patdavies]

Be warned if you use HP to buy a car then if you fall behind with the payments the car can be taken from you very quickly because it is not your property, the legal owner (the loan company) simply exercise their right to take back what is theirs,

 

 

Not quite. Once one third of the value is paid, then a court order is required to repossess the vehicle - the HP company cannot "simply exercise their right"

[rdm2006]

No Mossycat this happened in 2002 and like i said no one had told me about GAP insurance.

 

Can you believe how many insurance companies missed a chance to make a sale:eek:.