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Successful soga rejection - hire purchase and negative equity

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Hi there

I will try and keep a complicated story simple!

I saw a car I was interested in the price was 21k. The car was 9 months old and had done less than 3,000 miles

I took a reduced part exchange price for my car under pressure from the pushy salesman to get the deal done - (I would never have taken this price normally)this entailed rolling over 5k of negative equity into the new hire purchase agreement

3 months later a warning light comes on

 

Take it to the garage and there is unrecorded accident damage - after much time and stress and reports my claim to have the car rejected is upheld by the finance company

 

The independent report confirmed the car was not fit for purpose not safe to drive and a fire risk - you can imagine how scary it is that I have been driving around in this car with my family including two young children

 

In any event I come to my question - the finance company has asked me to repay the negative equity

 

I have argued that the agreement between them and I does not make reference to any negative equity - it defines the goods as the car and the cash price for the goods is the total amount including the negative equity - given the circumstances I think they should write it off - I would be grateful for any input - thanks in advance

Edited by citizenB
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I will try and find someone who can help.


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Just my own opinion the garage has been negligent in selling you this vehicle

 

It needs to be the garage to put you back into the same position as before you traded in your own vehicle in a financial sense

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Hi Thanks

My complaint also upheld that they had advertised the car as one owner when it was actually two owners

They also missold a gap insurance by not providing me with the documents providing me with the right to cancel

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The garage has been negligent in that they owed you a duty of care, they breached that duty of care, and you suffered a loss because of that breach

 

I realise this comes under Tort and individual personal contract in selling and to purchase the vehicle (SOGA) but they have been negligent and you have suffered personal loss because of that breach

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Thanks

Any thoughts on the structure of the hire purchase

I would have expected a hp agreement for the cash value of the car and a separate loan agreement for any negative equity

The goods are defined as the car and the cash price is the inclusive figure - hire purchase agreement makes no reference to part exchange or negative equity

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Seperate loan agreements for vehicle purchase are a no,no

 

For one they have to be within the 4 corners of the one agreement

 

There was a big stink a while ago where sub prime car finance companies were getting people to sign seperate loan agreements for the deposits. A recipie for disaster with enforcement of both agreements.

 

If your vehicle was taken in part exchange and listed on the new finance aghreement then the car dealership would have to get permission from the original finance company to trade in that vehicle. You cannot sell a car on finance

 

That then would have released you from all financial obligations as that original finance agreement (Car) would be termnated on signing the new finance agreement

 

Your only contractual obligation would be the terms of the new finance agreement

 

They cannot chase you on the negative equity of the old vehicle you traded in as that agreement has been terminated with the new finance agreement

 

That is how i see it anyway if it makes sense

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Thank you this is how I see it just need to convince them to play ball

I have made it clear I am not going to pay it

I will continue to pay my monthly payment until settled to keep my hands clean

The finance company keeps banging on about the invoice the dealer Sent to them showing the settlement on the old car in excess of the trade in value - I don't see the relevance of this as my contract with them is the hire purchase agreement

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Yep

 

You are only bound by the terms in that new hire purchase agreement

 

The previous agreeement has now been terminated with the original finance companies consent. If they have any issues their beef is with the garage that sold you the car, not with you

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The finance company is sticking to their guns

Stating because the invoice from the dealer to them referred to the shortfall then I am still liable for the negative equity

They have no interest in compensating me for the fact I was driving around in a death trap or the fact I would never had accepted the part exchange price under normal circumstances

Doesn't seem fair you go into an agreement with a car then as a result of being supplied with a dangerous vehicle you are left with no car and a request to pay £5k

They back you into a corner take away the courtesy car, keep taking the payments until you crumble

Whinge over!

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And i say how can you be liable for an agreement that has been terminated with the consent of that finance company??

 

It seems you are going to have to go through the FOS with this one

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Thanks

Any thoughts on the structure of the hire purchase

I would have expected a hp agreement for the cash value of the car and a separate loan agreement for any negative equity

The goods are defined as the car and the cash price is the inclusive figure - hire purchase agreement makes no reference to part exchange or negative equity

 

It is not really negative equity because you do not own the car until the last payment. The car is purchased from the dealer by the finance company and hired to you. The sums due are the the payments left to be settled under the hp agreement.

What happens when an agreement is terminated and the car returned, is that the amount the car fetches at auction is deducted from the amount still due under the contract and you are liable for that.

 

You cannot part exchange because it is not your car


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I am not 100% sure, but I would say that you owe the 5k. It would depend on what exactly you signed up to though. I'm not exactly sure how this sort of finance deal is normally structured.

 

As Dodgeball said, the old car would not normally belong to you until the finance is paid off. In effect the finance company agreed to lend you the deposit for the new car.

 

I would say that the 5k liability is really a liability under the old finance agreement rather than the new one. Returning the new car under SOGA would get you out of finance on the new car, but any liabilities you had under the old agreement could remain in place.

 

I don't think you can turn around and say that you only accepted a low part exchange price due to a pushy salesman. That is the salesman's job - if you accepted that price for your old car you can't now turn around and change your mind.

 

It is worth going through the T&Cs with a fine tooth comb though.


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Just a quick one

 

You can part exchange with the original finance companies permission as the vehicle remains their property until the final payment is made.

 

Though any balance up to the 50% mark will still be due if voluntary terminating the agreement. s.100 CCA 1974

 

Any shortfall can be claimed against the trader who sold the lemon by the borrower

(Unfair credit bargin???)

 

Or am i barking up the wrong tree??

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You can voluntarily terminate under section 99, only if you did you would loose any rights to any credit for the value of the car, so it depends as to how much you have paid off. On VT you have to make up the difference between what you have paid to 50% of the contractual debt under the agreement pus any arrears, on a voluntary surrender you have to pay what is left on the contract but less whatever the value of the car is.

 

You cannot use this facility to part exchange unfortunately. Once the agreement is terminated they cannot unterminate it. You would have to have a new agreement


DO NOT PAY UPFRONT FEES TO COLD CALLERS PROMISING TO WRITE OFF YOUR DEBTS

DO NOT PAY UPFRONT FEES FOR COSTLY TELEPHONE CONSULTATIONS WITH SO CALLED "EXPERTS" THEY INVARIABLY ARE NOTHING OF THE SORT

BEWARE OF QUICK FIX DEBT SOLUTIONS, IF IT LOOKS LIKE IT IS TO GOOD TO BE TRUE IT INVARIABLY IS

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That is my understanding

 

In trading in the vehicle the OP has reached the 50% mark to Voluntary terminate the agreement as opposed to a voluntary surrender. That way the OP faces no further liability. He would if he has still to reach that 50% mark but you do not have to reach that 50% mark to do a VT. Any remaining obligation will be on the debtor up to the 50% mark with the finance company

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That is my understanding

 

In trading in the vehicle the OP has reached the 50% mark to Voluntary terminate the agreement as opposed to a voluntary surrender. That way the OP faces no further liability. He would if he has still to reach that 50% mark but you do not have to reach that 50% mark to do a VT. Any remaining obligation will be on the debtor up to the 50% mark with the finance company

 

It is not trading in though. The car is returned to the creditor not to the dealer, they will not do a trade in.


DO NOT PAY UPFRONT FEES TO COLD CALLERS PROMISING TO WRITE OFF YOUR DEBTS

DO NOT PAY UPFRONT FEES FOR COSTLY TELEPHONE CONSULTATIONS WITH SO CALLED "EXPERTS" THEY INVARIABLY ARE NOTHING OF THE SORT

BEWARE OF QUICK FIX DEBT SOLUTIONS, IF IT LOOKS LIKE IT IS TO GOOD TO BE TRUE IT INVARIABLY IS

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It is not trading in though. The car is returned to the creditor not to the dealer, they will not do a trade in.

 

Yes thanks

 

Well nine times out of ten the creditor will say just send to it xyz auction house or make us an offer as to the vehicles value

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The procedure should have been to withdraw from the agreement first under section 66a, and notify the dealer that the car wa not fit for purpose. They will then either chase you for the money, which you can defend in court or take the car back. To late in this case unfortunately.


DO NOT PAY UPFRONT FEES TO COLD CALLERS PROMISING TO WRITE OFF YOUR DEBTS

DO NOT PAY UPFRONT FEES FOR COSTLY TELEPHONE CONSULTATIONS WITH SO CALLED "EXPERTS" THEY INVARIABLY ARE NOTHING OF THE SORT

BEWARE OF QUICK FIX DEBT SOLUTIONS, IF IT LOOKS LIKE IT IS TO GOOD TO BE TRUE IT INVARIABLY IS

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