Voluntary terminate car finance?

[john]

I took a 4 or 5 year finance agreement on my car which ends a year in august. I cannot pay this and I am now getting into debt to make the payments. I have read that you can voluntary terminate the agreement after half the payments have been made. I'm just pretty sure it can't be that easy??? I do not want the car, I owe about 3600 and its worth approx 5000. I have no assets. Whats the worst that could happen to me? Thanks

[Peterbard]

Yes you can terminate at anytime you like. If you have payed half the total contract price already and you have no arrears you should not be liable for any other payments.(providing the car is in reasonable condition for its age)

You need to write them a letter saying you wish to voluntarily terminate the vehicle under section 99 of the consumer credit act give them 14 days notice after which you will consider the agreement terminated , ask them to either collect the car or provide a convenient place where you can deliver it(within reasonable distance).

 

Some reading here.(and a template letter )

 

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=16_hire_purchase_debt

 

Word of caution if they issue a default notice and terminate for arrears before you do this you will be liable for all sums due under the contract.

Edited June 18, 2013 by Dodgeball

[john]

Thanks for the reply. What proof of servicing will they need, and what do you think constitutes fair wear and tear?

[dx100uk]

also

 

not got PPI/GAP/other useless insurance on the agreement have you?

or any PENALTY fees?

 

that might get the balance down too.

as all are reclaimable

 

who was the agreement with?

[Peterbard]

Thanks for the reply. What proof of servicing will they need, and what do you think constitutes fair wear and tear?

 

I would send it recorded, you may find that they want you to fill in their paperwork, there is no reason why you should agree to this, as you are exercising your statutory right, but if it expedites matters you may decide to comply after carefully studying the contents. Personally I would tell them that they have had all that is required.

 

The act just says that you must have taken "reasonable care" of the goods. In vehicle terms , usual scuffs ware and tear on the body-work or interior are acceptable. Although they may not agree and you may have to argue the point once the car has been returned. I find that it is a good idea to take lots of pictures of the vehicle before return include something that identifies the date in the shot, a newspaper something like that, just in case.

Edited June 18, 2013 by Dodgeball

[SeanG79]

I do not want the car, I owe about 3600 and its worth approx 5000.

 

If the vehicle is worth more than the finance outstanding, why not sell the vehicle and settle the finance?

[Peterbard]

If the vehicle is worth more than the finance outstanding, why not sell the vehicle and settle the finance?

 

Cant do that because it belongs to the dealer until the last payment is made.

 

If you wanted you could apply for an early settlement figure form the finance company, this late into the agreement i do not think you would save a great deal on the agreement price though.

 

If you did VT and the car is as you say I do not think you would have many problems with the dealer as they would be able to re-sell at a profit.

 

The problems usually occur when they sell the customer a lemon in the first place, and the half term price is peanuts against what the car is worth. This is when they generally kick up a fuss about a V T.

[SeanG79]

Cant do that because it belongs to the dealer until the last payment is made.

 

It belongs to the bank/lender not the dealer

 

If you wanted you could apply for an early settlement figure form the finance company, this late into the agreement i do not think you would save a great deal on the agreement price though.

 

You don't need to save a lot on the settlement figure if the settlement figure is LESS than the amount you can currently sell the car for...

 

If you did VT and the car is as you say I do not think you would have many problems with the dealer as they would be able to re-sell at a profit.

 

What does the dealer have to do with anything in this scenario???

 

 

As much as the bank own the vehicle until the final payment has been made,

you can get a settlement figure, with their permission you can sell the vehicle,

however the finance has to be settled.

 

You can get the buyer to pay over X amount to the bank which settles the finance

and passes title to you (provided its a HP/Conditional sale and not a lease)

and then get the buyer to pay you the difference.

 

this is not as complicated as it sounds and happens fairly regularly

- if you decide sell this vehicle to a dealer, it will be something they do every week.

[john]

It is with close finance

[SeanG79]

Close Motor Finance don't offer finance lease, so the agreement will be a conditional sale/HP agreement.

 

If I were you, I would see how much you can sell the vehicle for, get a settlement figure too and if there is positive equity in your favour I would not VT the vehicle, rather look for a buyer, sell and settle the finance and get something out for all your years of paying...

[Peterbard]

The dealer usually process the collection and resale of the car. The issue of who owns the car is irrelevant, in fact they could be one of the same. The fact is that it should not be sold as it does not belong to the hire.

 

If you sell the vehicle whilst under finance you will be committing an offence.

[dx100uk]

It is with close finance

 

have you got gap/ppi/etc on this agreement?

 

might be you owe nowt?

 

dx

[SeanG79]

The dealer usually process the collection and resale of the car. The issue of who owns the car is irrelevant, in fact they could be one of the same. The fact is that it should not be sold as it does not belong to the hire.

 

If you sell the vehicle whilst under finance you will be committing an offence.

 

 

This is totally incorrect. With a VT the bank will usually have an auctioneer collect the vehicle on their behalf for the vehicle to be sold at auction.

 

You can request permission to sell the vehicle from the bank and provided the finance is settled as part of the sale there is no offence committed...

[Peterbard]

It belongs to the bank/lender not the dealer

 

 

 

You don't need to save a lot on the settlement figure if the settlement figure is LESS than the amount you can currently sell the car for...

 

 

 

What does the dealer have to do with anything in this scenario???

 

 

As much as the bank own the vehicle until the final payment has been made,

you can get a settlement figure, with their permission you can sell the vehicle,

however the finance has to be settled.

 

You can get the buyer to pay over X amount to the bank which settles the finance

and passes title to you (provided its a HP/Conditional sale and not a lease)

and then get the buyer to pay you the difference.

 

this is not as complicated as it sounds and happens fairly regularly

- if you decide sell this vehicle to a dealer, it will be something they do every week.

 

If you decide to do the latter option be very careful, if you sell to a dealer they will be wanting to re-sell at a profit, so it may not be in your interests.

 

It really depends on your individual circumstances, dealers in general do not like people who VT this is a fact, so beware of anyone who tries to tell you that this is not an option, it most certainly is.

[SeanG79]

It really depends on your individual circumstances, dealers in general do not like people who VT this is a fact, so beware of anyone who tries to tell you that this is not an option, it most certainly is.

 

Seriously? please differentiate between the bank (Close Motor Finance) and a dealer, they are in no way the same thing.

 

Dealers settle existing finance on behalf of customers all the time, what do you think happens every time a customer part-exes a vehicle that's got remaining finance? Obviously they will sell at a profit but for a hassle free way of getting rid if there is +ve equity in the vehicle this is a MUCH better idea than doing a VT

[Peterbard]

Seriously? please differentiate between the bank (Close Motor Finance) and a dealer, they are in no way the same thing.

 

Dealers settle existing finance on behalf of customers all the time, what do you think happens every time a customer part-exes a vehicle that's got remaining finance? Obviously they will sell at a profit but for a hassle free way of getting rid if there is +ve equity in the vehicle this is a MUCH better idea than doing a VT

 

You seem to be trying to start an argument here by stating irrelevancies, the dealer at the point of sale will be the agent of the credit company he may deal with the collection of the vehicle, he may not, it is not at issue, the facts are as they are and as stated.

 

Yes a dealer may wish to part ex, the question at the head of this thread was related to VT and that was the information I provided,

[Peterbard]

Sorry I missed the last biit it may be better than a VT but for whom, it depends on where within the agreement the hirer is , how much is outstanding , how much the car is worth , and what sort of a deal he can get.

 

Sometimes a VT is by far the best deal, which is why dealers associations have been campaigning so hard to get the facility removed from the statute.

Edited June 18, 2013 by Dodgeball

[SeanG79]

I am not wanting to argue. The OP came seeking advise regarding VT. He clearly states he owes approx £3600 and the car is worth approx £5000, if he found a buyer prepares to pay near enough £5000 (obviously settling the finance of £3600) the OP is £1400 better off than if he VT'd the vehicle. VT is the best deal for the customer when there is negative equity in the vehicle but not when there is positive equity.

 

Anyhow to avoid going around in circles and repeating myself any more than I have already. OP, ring up Close Motor and request a settlement figure, then establish what you can actually sell the car for, if you can get more than what's owed, no brainer, VT is not the best solution. however if you have negative equity (owe more than you can sell the car for) then you need to look into the VT option. You are able to VT the car if you have paid over 50% (your deposit + all payments) of the vehicle + ALL charges. Then provided the car is in good condition subject to expected wear and tear for a vehicle of its age then you need to write to the bank and state your intention to VT.

[Peterbard]

I am not wanting to argue. The OP came seeking advise regarding VT. He clearly states he owes approx £3600 and the car is worth approx £5000, if he found a buyer prepares to pay near enough £5000 (obviously settling the finance of £3600) the OP is £1400 better off than if he VT'd the vehicle. VT is the best deal for the customer when there is negative equity in the vehicle but not when there is positive equity.

 

Anyhow to avoid going around in circles and repeating myself any more than I have already. OP, ring up Close Motor and request a settlement figure, then establish what you can actually sell the car for, if you can get more than what's owed, no brainer, VT is not the best solution. however if you have negative equity (owe more than you can sell the car for) then you need to look into the VT option. You are able to VT the car if you have paid over 50% (your deposit + all payments) of the vehicle + ALL charges. Then provided the car is in good condition subject to expected wear and tear for a vehicle of its age then you need to write to the bank and state your intention to VT.

 

 

Wouldn't want you to go around in circles

 

The answer to the OPs question is yes you can VT it is a simple process, however you have to be careful, and ensure it is your best option, also beware that dealers do not like facilitating these so you may encounter some hostility.

[Peterbard]

Just to clarify one last point it is quite OK to contact the dealer regarding the VT as said they are the agent.

[john]

Close Motor Finance don't offer finance lease, so the agreement will be a conditional sale/HP agreement.

 

I am a bit confused now, does this mean that I can't VT because its close finance?

[Peterbard]

I am a bit confused now, does this mean that I can't VT because its close finance?

 

Yes you can VT on a HP or conditional sale agreement.

 

Just send the letter and hand the car back.

[postggj]

Make sure you do it as a VT and not a VS

[Peterbard]

Seriously? please differentiate between the bank (Close Motor Finance) and a dealer, they are in no way the same thing.

 

Dealers settle existing finance on behalf of customers all the time, what do you think happens every time a customer part-exes a vehicle that's got remaining finance? Obviously they will sell at a profit but for a hassle free way of getting rid if there is +ve equity in the vehicle this is a MUCH better idea than doing a VT

 

Perhaps I made a mistake not responding to this and it has confused the Op, i did not want to fuel an off topic flame.

 

Yes seriously, dealers do not like VTs because usually they cost them money, maybe indirectly but it is most certainly it is a fact that they do whatever they can to avoid their obligations under the act.

 

The OP does not want to part exchange, he has indicated that he is finding it hard to maintain any payments and this would mean further liability.

If he did he would not get what the car is worth because obviously the dealer would want to re-sale and require a margin for the mark up.

 

So that leaves a private deal, the finance company owns the car, he cannot sell it without their permission, they would have to release him from his obligations under the contract, if he sold it without he would be selling their property so any money raised by the sale would be theirs, so why would they.

 

Sorry but it is really not that complicated.

 

Send the letter and take the car back it f that is what you want to do.

Or just send the letter and if anything untoward develops come back on here.

Edited June 18, 2013 by Dodgeball

[Peterbard]

Make sure you do it as a VT and not a VS

 

Sensible advice, voluntary surrender of the vehicle would mean that you were liable for all sums due under the agreement. Use the template letter and mention section 99 you will be fine.