car finance

[stephan]

just a quick general inquiry I have a car on finance and it is worth less than I owe Iv`e heard I can hand it back to the finance company when i have paid back a certain amount,if so how much do i have to pay before handing it back and does it affect my credit rating.

[buzby]

Yes - it will count as a default as you didn't complete the contract. The handing back can only occur if it is HP, not leased, purchase plan or credit.

[powelll]

If you check your original credit agreement it should clearly state at the top if it's a Hire Purchase agreement or not. The right of voluntary termination is under Consumer Credit Act rules so if the original agreement was over £25k this won't apply.

 

If it is CCA regulated there should be a box entitled 'Termination - your Rights' and it will give the '50% figure'. This is the amount you would owe if you decide to voluntarily terminate the agreement. You can calculate if you would owe anything by taking the original agreement amount and deducting how much you have already paid.

 

You need to voluntarily terminate in writing.

[stephan]

This is hire purchase I will dig out the aggrement and have a look

[powelll]

You may also find the below link useful:

 

National Debtline England & Wales | Debt Advice | Factsheet 16 How To Deal With Hire Purchase Debt