Car Loan Issues - Advice Needed.

[GAVINB]

I currently am 2.5years into a 5 year loan agreement secured against a new car. I am in difficulties and have fallen into arrears on the account.

 

I have been advised to return the car by the bank, and that they will sell it at auction, but that I will be liable for the difference.

 

Is this possible, what are my options - can anybody offer any help or advice.

[cerberusalert]

Was it a HP agreement or a normal loan? If the latter you would be far better selling it yourself rather than through an auction particularly as the bank will add even more charges onto the debt for handling the sale.

[GAVINB]

thanks - it was hp - and I have offered that - but they are not willing to accept this- saying that the arrears are too much at this stage.

[joemay]

If you can somehow stop if from going to auction then do. OH purchased a car for £25k. Recession hit OH business, He handed car back to bank approx. 6 months after hp agreement started. They sold the car for only £12k, with deposit and payments made OH has been left with a debt for £21k:eek:.

 

Was it a regulated agreement? As you have been paying for 2.5 years, so long as you have paid a certain percentage you do not have to hand back the car automatically. Don't just do what the banks want you to do, get advice first.

 

I'm afraid I don't know the in's and out's, but I'm sure someone will come along shortly who can tell you all you need to know;)

 

All the best

[loobyloo85]

Hi there

 

I would suggest that you look into your agreement first of all, to double check the repossession rights. A lot of companies now, are stating that the items are on Hire Purchase, and that the credit is secured on the item, however, it is coming to light that a lot of the credit is actually unsecured, and therefore the item would be fully protected. It is sometimes a way of the creditors getting all their money back.

However, if this is definately secured against your car, you need to negotiate with the company to see if you can come to any sort of arrangement to repay the arrears, to save you having to lose the car - you could explain why the vehicle is important and necessary for you. Normally, if you do fall behind, depending on which company it is, the company would go down repossession proceedings, and auction the vehicle. If there is then any shortfall left, you would be liable for this amount. On the other hand, if there is equity in the vehicle, you would also receive this amount. With you being half way through, and only missing 2 months worth of payments, it is definately worth negotiating with them more, to explain that if you lost this vehicle it would put you out. You could also ask them for any suggestions as to whether you can hand this vehicle back, and then get another which has a lower payment each month? Alternatively, if you cannot afford the payments, you could hand the car back anyway, and then use public transport/someone elses vehicle for the next few months until you have saved up for a new, cheap run around, OR, you could take out another HP which is cheaper with another company.

 

Hope this helps