Voluntary terminate car finance?

[Peterbard]

Oh, it's also worth remembering that the 50% point can be moved by that ever present balloon payment, can't it?

 

Yes the VT point operates on the TAP so it would move towards the end of the contract period, sometimes it is not economically viable under these circumstances.

[postggj]

Legislation may have changed, so if it has please give a link to the regulations that state a vehicle can be returned back to the dealer who sold the vehicle, who in-turn deals with a finance company when a VT is involved

 

I myself have had a total of four cars which i have done a voluntary termination after reaching the half way point

 

On one occasion they came and collected the vehicle from my home address

A second time the finance company told me to take it to a dealership 30 miles away

 

The remaining two occasions i was told to take the vehicle direct to a designated auction house

 

On each occasion of doing a VT, i had to inform the finance company in writing direct, and give them 14 days to comply with my request. Not once did i have to contact a dealership. The finance company told me that the only exception would be if the finance company had a contract with the car dealership and i was purchasing a new vehicle from that dealership.

 

As stated, i know no difference but a link to the legislation to support your reasoning Dodgeball would be nice about surrendering the vehicle to a motor trader direct with a VT will put this to bed. I am asking for educational reasons to advise future posters, not through any point scoring nonsense

[SeanG79]

This thread seems to have gained some momentum. A number of points regarding VT:

 

1. The 50% mark is not a point in time, it is an amount paid, this point determined by the vehicle price + ALL charges (50% of this amount must be paid in order to VT). The amount you need to have paid includes all monthy payments + the deposit payment (cash & part ex).

2. The VT agreement is between the Lender/Funder/Bank and the customer, the Dealer has no bearing in this relationship.

3. Dealers often sell cars to customers advising them of their ability to hand back the car at the 50% mark. There is nothing to discourage a dealer from the customer VT'ing the vehicle.

4. The vehicle needs to be in "good" condition for its age and mileage at the time of the VT, this is not the dealers responsibility, this is the customers responsibility and they will be liable for damages etc. The lender will appoint an agent, most often an auction house to collect the vehicle and sell the vehicle at auction. The agent will inspect the vehicle and provide a report to the lender outlining damages.

5. If you VT a vehicle, there will be a VT marker placed on your account. When lenders see these they will often offer you a reduced term or require a larger deposit, this covers them against negative equity as you will reach the 50% point earlier in the life of the vehicle, allowing the lender to achieve higher prices at auctions thus minimizing their risk to future VT's. Alternatively some will insist on the finance being via a fixed sum loan agreement, in which case there is no ability to VT.

6. The introduction of VT to HP agreements was to protect the customer from having a vehicle with huge negative equity and thus being trapped in the finance agreement. With a VT the lender is encouraged to only advance "sensible" money on the vehicle alternatively the customer will be able to VT the agreement and the lender will be left to bear those losses.

7. The amount charged for the vehicle by the dealer originally makes no difference, the dealer is not bound to be selling the vehicle at any "realistic" price. The onus of this is on the customer to decide if the vehicle is worth the asking price and the lender to decide the maximum amount they will advance on the vehicle. The vehicle may cost £20k but the lender may decide a max advance of £12k, its up to the customer to decide if they wish to pay £8k deposit or not. This will then mean the VT point will be realised early on in the agreement. Nowhere is the dealer responsible if the vehicle is deemed later to be over-priced.

8. Onus will be on the customer to return the vehicle to the appointed agent within "reasonable" distance to the customer, alternatively I know lenders have collected the vehicles from customers.

[SeanG79]

Legislation may have changed, so if it has please give a link to the regulations that state a vehicle can be returned back to the dealer who sold the vehicle, who in-turn deals with a finance company when a VT is involved

 

I myself have had a total of four cars which i have done a voluntary termination after reaching the half way point

 

On one occasion they came and collected the vehicle from my home address

A second time the finance company told me to take it to a dealership 30 miles away

 

The remaining two occasions i was told to take the vehicle direct to a designated auction house

 

On each occasion of doing a VT, i had to inform the finance company in writing direct, and give them 14 days to comply with my request. Not once did i have to contact a dealership. The finance company told me that the only exception would be if the finance company had a contract with the car dealership and i was purchasing a new vehicle from that dealership.

 

As stated, i know no difference but a link to the legislation to support your reasoning Dodgeball would be nice about surrendering the vehicle to a motor trader direct with a VT will put this to bed. I am asking for educational reasons to advise future posters, not through any point scoring nonsense

 

This is 100% correct and there is no legislation which ties the original dealer or motor trader into the VT process.

[Peterbard]

Legislation may have changed, so if it has please give a link to the regulations that state a vehicle can be returned back to the dealer who sold the vehicle, who in-turn deals with a finance company when a VT is involved

 

I myself have had a total of four cars which i have done a voluntary termination after reaching the half way point

 

On one occasion they came and collected the vehicle from my home address

A second time the finance company told me to take it to a dealership 30 miles away

 

The remaining two occasions i was told to take the vehicle direct to a designated auction house

 

On each occasion of doing a VT, i had to inform the finance company in writing direct, and give them 14 days to comply with my request. Not once did i have to contact a dealership. The finance company told me that the only exception would be if the finance company had a contract with the car dealership and i was purchasing a new vehicle from that dealership.

 

As stated, i know no difference but a link to the legislation to support your reasoning Dodgeball would be nice about surrendering the vehicle to a motor trader direct with a VT will put this to bed. I am asking for educational reasons to advise future posters, not through any point scoring nonsense

 

There isn't any postbag, for some reason, meaning is being given to my posts that was not intended or made. I never said there was, notice can be sent to the dealer who must pas it on to the creditor(i also said that this would be sent in addition to notice to the creditor), that is all. The finance company may and often do process the return of the vehicle through the original dealer, but not always.

 

Having said that I have known cases where customers have been so frustrated with creditors not collecting vehicles that they have taken the car back to the original dealer and thrown the keys at them, rang the creditors to advise. I wouldn't condone this but it has happened to my knowledge.

 

The first VT I did was a BMW i was told to return it to a dealers in Manchester, before I did the VT i had the car serviced and an AA inspection which stated that the car was in reasonable condition for its age(you could do this then, I do not think the facility is available now). the dealer walked around the car and drew rings around invisible marks on the bodywork and then ripped up all the reports in front of me. I later received a bill for over £2000 for work needed.

Obviously I did not pay it and eventually they backed down, but I know from first had how dealers regard VTs and this view is substantiated in the reports mentioned and given in previous posts.

 

The disagreements on here are really about minutia and are driven more because stepped into someones sacred turf rather than any disagreement over the actual process, which is really quite straightforward.

[sequenci]

A slight aside, but potentially interesting to you all. Check out the decision in Yeoman Credit, Ltd. v. Waragowski

 

There have been arguments that the 50% rule *could* still be excerised post-default. There was a great deal of discussion at the time; I really don't know if anything came of it.

[Peterbard]

This thread seems to have gained some momentum. A number of points regarding VT:

 

1. The 50% mark is not a point in time, it is an amount paid, this point determined by the vehicle price + ALL charges (50% of this amount must be paid in order to VT). The amount you need to have paid includes all monthy payments + the deposit payment (cash & part ex).

2. The VT agreement is between the Lender/Funder/Bank and the customer, the Dealer has no bearing in this relationship.

3. Dealers often sell cars to customers advising them of their ability to hand back the car at the 50% mark. There is nothing to discourage a dealer from the customer VT'ing the vehicle.

4. The vehicle needs to be in "good" condition for its age and mileage at the time of the VT, this is not the dealers responsibility, this is the customers responsibility and they will be liable for damages etc. The lender will appoint an agent, most often an auction house to collect the vehicle and sell the vehicle at auction. The agent will inspect the vehicle and provide a report to the lender outlining damages.

5. If you VT a vehicle, there will be a VT marker placed on your account. When lenders see these they will often offer you a reduced term or require a larger deposit, this covers them against negative equity as you will reach the 50% point earlier in the life of the vehicle, allowing the lender to achieve higher prices at auctions thus minimizing their risk to future VT's. Alternatively some will insist on the finance being via a fixed sum loan agreement, in which case there is no ability to VT.

6. The introduction of VT to HP agreements was to protect the customer from having a vehicle with huge negative equity and thus being trapped in the finance agreement. With a VT the lender is encouraged to only advance "sensible" money on the vehicle alternatively the customer will be able to VT the agreement and the lender will be left to bear those losses.

7. The amount charged for the vehicle by the dealer originally makes no difference, the dealer is not bound to be selling the vehicle at any "realistic" price. The onus of this is on the customer to decide if the vehicle is worth the asking price and the lender to decide the maximum amount they will advance on the vehicle. The vehicle may cost £20k but the lender may decide a max advance of £12k, its up to the customer to decide if they wish to pay £8k deposit or not. This will then mean the VT point will be realised early on in the agreement. Nowhere is the dealer responsible if the vehicle is deemed later to be over-priced.

8. Onus will be on the customer to return the vehicle to the appointed agent within "reasonable" distance to the customer, alternatively I know lenders have collected the vehicles from customers.

 

 

Most of this is correct.

However it ignores the commercial aspect of the transaction . The dealer is indeed held to account for the value of the car, although indirectly, the creditor and the dealer have an ongoing relationship if the dealer continues to sell vehicles that at the half way point do not cove the cost of re paying the agreement when sold dealers are sanctioned .

 

There is no consumer law for this it is just the way the system works and has for a number of years.

 

However this protection against vastly over pricing of vehicles is mentioned in the OFT report I mentioned earlier and also feature largely in the consultation also mentioned on there and, really is the reason that the facility exists in the first place.

[SeanG79]

However it ignores the commercial aspect of the transaction . The dealer is indeed held to account for the value of the car, although indirectly, the creditor and the dealer have an ongoing relationship if the dealer continues to sell vehicles that at the half way point do not cove the cost of re paying the agreement when sold dealers are sanctioned .

 

This is incorrect.Think of these online car finance brokers. When a deal is sent up to the lender it includes all vehicle details and customer details. The lenders credit team/underwriters then get vehicle valuations from CAPs or Glasses and depending on their risk structure and the customers risk profile they determine a maximum advance (this max. advance may be higher than the customer is looking to lend in which case the finance is approved "as proposed", if not, they will approve subject to conditions like a max. advance in which case the dealer can reduce his asking price or the customer must stump up the extra deposit). The first time they become aware of who the dealer is can be as late as when the finance documents are submitted for payout. They may have dealer requirements for instance I know of one lender where the dealer must have traded for a minimum period of 3 years, they will also have blacklisted dealers (usually due to fraud or cases where the customer enforces SOGA and the dealer doesn't step up to make right whatever issues resulting in the lender suffering a loss).

 

I have never known had a dealer to suffer any consequences for a customer enforcing their right to VT but I have known plenty of customers who enforced their right to VT

[postggj]

A slight aside, but potentially interesting to you all. Check out the decision in Yeoman Credit, Ltd. v. Waragowski

 

There have been arguments that the 50% rule *could* still be excerised post-default. There was a great deal of discussion at the time; I really don't know if anything came of it.

 

 

100 Liability of debtor on termination of hire-purchase etc. agreement.

(1)Where a regulated hire-purchase or regulated conditional sale agreement is terminated under section 99 the debtor shall be liable, unless the agreement provides for a smaller payment, or does not provide for any payment, to pay to the creditor the amount (if any) by which one-half of the total price exceeds the aggregate of the sums paid and the sums due in respect of the total price immediately before the termination.

 

(2)Where under a hire-purchase or conditional sale agreement the creditor is required to carry out any installation and the agreement specifies, as part of the total price, the amount to be paid in respect of the installation (the “installation charge ”) the reference in subsection (1) to one-half of the total price shall be construed as a reference to the aggregate of the installation charge and one-half of the remainder of the total price.

 

(3)If in any action the court is satisfied that a sum less than the amount specified in subsection (1) would be equal to the loss sustained by the creditor in consequence of the termination of the agreement by the debtor, the court may make an order for the payment of that sum in lieu of the amount specified in subsection (1).

 

(4)If the debtor has contravened an obligation to take reasonable care of the goods or land, the amount arrived at under subsection (1) shall be increased by the sum required to recompense the creditor for that contravention, and subsection (2) shall have effect accordingly.

 

(5)Where the debtor, on the termination of the agreement, wrongfully retains possession of goods to which the agreement relates, then, in any action brought by the creditor to recover possession of the goods from the debtor, the court, unless it is satisfied that having regard to the circumstances it would not be just to do so, shall order the goods to be delivered to the creditor without giving the debtor an option to pay the value of the goods.

 

 

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.

 

(2)Termination of an agreement under subsection (1) does not affect any liability under the agreement which has accrued before the termination.

 

(3)Subsection (1) does not apply to a conditional sale agreement relating to land after the title to the land has passed to the debtor.

 

(4)In the case of a conditional sale agreement relating to goods, where the property in the goods, having become vested in the debtor, is transferred to a person who does not become the debtor under the agreement, the debtor shall not thereafter be entitled to terminate the agreement under subsection (1).

 

(5)Subject to subsection (4), where a debtor under a conditional sale agreement relating to goods terminates the agreement under this section after the property in the goods has become vested in him, the property in the goods shall thereupon vest in the person (the “previous owner ”) in whom it was vested immediately before it became vested in the debtor:

Provided that if the previous owner has died, or any other event has occurred whereby that property, if vested in him immediately before that event, would thereupon have vested in some other person, the property shall be treated as having devolved as if it had been vested in the previous owner immediately before his death or immediately before that event, as the case may be.

[Peterbard]

A slight aside, but potentially interesting to you all. Check out the decision in Yeoman Credit, Ltd. v. Waragowski

 

There have been arguments that the 50% rule *could* still be exercised post-default. There was a great deal of discussion at the time; I really don't know if anything came of it.

 

Yes I had forgotten about this case, costs against the dealer i believe here, to cover sums required to settle an agreement, it certainly tied the dealer into the relationship even post sale.

 

Can't seem to find the actual transcript do you have a link

[sequenci]

Post: Cheers for posting up the legislation sir, but I know it like the back of my hand already

[sequenci]

Yes I had forgotten about this case, costs against the dealer i believe here, to cover sums required to settle an agreement, it certainly tied the dealer into the relationship even post sale.

 

Can't seem to find the actual transcript do you have a link

 

Not that I can find right now, but I can have a dig through a few databases a little later!

 

In the meantime, here's a transcript of an article that talked about it in detail at the time. You may recognise the publication!

 

http://www.lacors.gov.uk/lacors/ContentDetails.aspx?id=1054

[postggj]

Just a reference for other posters

 

Would i ever doubt your knowledge base as being the "ONE" Neo

[Peterbard]

This is incorrect.Think of these online car finance brokers. When a deal is sent up to the lender it includes all vehicle details and customer details. The lenders credit team/underwriters then get vehicle valuations from CAPs or Glasses and depending on their risk structure and the customers risk profile they determine a maximum advance (this max. advance may be higher than the customer is looking to lend in which case the finance is approved "as proposed", if not, they will approve subject to conditions like a max. a

 

dvance in which case the dealer can reduce his asking price or the customer must stump up the extra deposit). The first time they become aware of who the dealer is can be as late as when the finance documents are submitted for payout. They may have dealer requirements for instance I know of one lender where the dealer must have traded for a minimum period of 3 years, they will also have blacklisted dealers (usually due to fraud or cases where the customer enforces SOGA and the dealer doesn't step up to make right whatever issues resulting in the lender suffering a loss).

 

I have never known had a dealer to suffer any consequences for a customer enforcing their right to VT but I have known plenty of customers who enforced their right to VT

 

 

This is referring to the financing arrangements, eventually there has to be a dealer who supplies the vehicle.

 

I can only refer back to post 47 on here in which the OFT makes the obvious statement;

 

• HP is not simply credit. With HP contracts the lender retains all the rights of

ownership to the goods which are financed, while the consumer assumes the

liability. VT provides a safeguard against consumer detriment arising from this

imbalance.

• The VT provisions give the lender a proper incentive to lend on goods that are

fairly durable. If the asset was not durable, the consumer would have entered

into a hire agreement with an option to purchase what would be low-value

goods at the end, while the lender would have inadequate security. Such an

agreement would not be in the interest of either the lender or the consumer.

 

It is fairly obvious that selling a car which is of poor value would sanction the dealer isn't it ?

[sequenci]

Just a reference for other posters

 

Would i ever doubt your knowledge base as being the "ONE" Neo

 

It's about the only thing I do know!. Don't ever ask me about anything else. ever hahaha

[postggj]

I have started a new thread on this matter

[Peterbard]

Not that I can find right now, but I can have a dig through a few databases a little later!

 

In the meantime, here's a transcript of an article that talked about it in detail at the time. You may recognise the publication!

 

http://www.lacors.gov.uk/lacors/ContentDetails.aspx?id=1054

 

Gosh yes a blast form the past, all good stuff though

[SeanG79]

This is referring to the financing arrangements, eventually there has to be a dealer who supplies the vehicle.

 

I can only refer back to post 47 on here in which the OFT makes the obvious statement;

 

• HP is not simply credit. With HP contracts the lender retains all the rights of

ownership to the goods which are financed, while the consumer assumes the

liability. VT provides a safeguard against consumer detriment arising from this

imbalance.

• The VT provisions give the lender a proper incentive to lend on goods that are

fairly durable. If the asset was not durable, the consumer would have entered

into a hire agreement with an option to purchase what would be low-value

goods at the end, while the lender would have inadequate security. Such an

agreement would not be in the interest of either the lender or the consumer.

 

It is fairly obvious that selling a car which is of poor value would sanction the dealer isn't it ?

 

OK, assuming I agree with your statement about it being obvious that a dealer would receive a sanction in such a scenario, which I don't.

 

How is poor value determined? Is it based on CAPs or Glasses valuations of the vehicle? The amount the vehicle can be sold for at auction? The amount a customer is prepared to pay for the vehicle?

 

Even the OFT guidelines/statements you quote don't mention the dealer having any responsibility associated to the VT

The VT provisions give the lender a proper incentive to lend on goods that are

fairly durable.

[Peterbard]

Perhaps we should just agree to differ, although it does seem that the Crowther report the HP act 1965 and the subsequent CCA, the OFt all think that the VT option is a valuable tool for consumer protection, however what do we know.

 

As for the the value of the goods, that is of course determined by its market value.

[SeanG79]

Perhaps we should just agree to differ, although it does seem that the Crowther report the HP act 1965 and the subsequent CCA, the OFt all think that the VT option is a valuable tool for consumer protection, however what do we know.

 

I also agree the VT option is valuable, so we can leave it at that

[Gaston Grimsdyke]

The disagreements on here are really about minutia and are driven more because stepped into someones sacred turf rather than any disagreement over the actual process, which is really quite straightforward.

 

Minutiae? You're advising people it's fine to VT to the original dealer as they are the agent of the creditor. You think that s175 establishes that. All s175 does is require an agent of the creditor to pass on notice, it doesn't of itself create an agency. That has to come from somewhere else in the Act. And in the case of s99 no such agency exists. Just read s99; by your logic it also means it would be fine for the debtor to make his HP payments to the dealer and not the creditor, which is clearly nonsense.

 

So ayone following your advice will not be effecting a VT and running the risk of a hostile termination, which is shedloads worse for them.

[Peterbard]

Minutiae? You're advising people it's fine to VT to the original dealer as they are the agent of the creditor. You think that s175 establishes that. All s175 does is require an agent of the creditor to pass on notice, it doesn't of itself create an agency. That has to come from somewhere else in the Act. And in the case of s99 no such agency exists. Just read s99; by your logic it also means it would be fine for the debtor to make his HP payments to the dealer and not the creditor, which is clearly nonsense.

 

So ayone following your advice will not be effecting a VT and running the risk of a hostile termination, which is shedloads worse for them.

 

Yes passing on the notice, as said minutia. You seem to be trying to make in issue out of nothing here, no one is saying that the dealer is responsible for the car, just that they should pass on the notice, anyway I also said to send it to the creditor so yes minutia.

[john]

OK, another spanner in the works here!!! The agreement says that I have no right to cancel this agreement under the consumer credit act 1987.

[SeanG79]

John, what is the agreement that you have, is it a finance lease agreement?

[john]

It says

 

Close Motor Finance Ltd

Conditional Sale Agreement Regulated by the Consumer Credit Act 1974

 

at the top of the page???