Advice Please - End Of Car Contract Period

cloudnine_2

Hi Everyone.
Come January 2009 I'm about to end a four year HP agreement with Merecedes financial services on a C class. They've just written to me inviting me to visit my local dealer to perhaps trade it in against a new one. Pigs will fly ! The car cost £35K new and is now worth no more than £9K.
My problem is that they want £15K come January for me to keep the car. Heres the sticky issue: I haven't got £15K and have an appalling credit score with at least one default. I'm also on a DMP with eight creditors for debts totaling £58K.
I phoned Merecedes and explained that I won't be in a position come January to settle but, because my employer contributes monthly towards my car and running costs, I could continue to pay, even at a raised amount monthly until the £15K is settled in full.
Merecedes Finance declined to extend or refinance the £15K due to my terrible credit score.
I can't be the only person who has been in this situation. What worries me, is that in January they'll recover the car, sell it off for an incredibly low amount at auction and then chase me for the balance. Of course, my employer won't continue to pay me for a fictious car and what will have become a debt to Mercedes.
At the end of the day, I'm trying my best to act responsibily and fore warned Merecedes in July 08 that this problem was up and coming.
Has anyone been in a similiar situation, or, do you have any words of guidance?
Thanks to all....

mummytofour

Hmm I was of the understanding that once you have paid half of the total cost of the agreement you can hand the car back? Please check the small print on your contract and in whatever case tell merc to go and shove their car. Think how much quicker you could be debt free without having the payment to them each month.

standupguy

mummytofour wrote: »

Hmm I was of the understanding that once you have paid half of the total cost of the agreement you can hand the car back? Please check the small print on your contract and in whatever case tell merc to go and shove their car. Think how much quicker you could be debt free without having the payment to them each month.

Unless the op put in 10k deposit the agreement will be unregulated and outside the Consumer Credit Act at the time the advance was made

cloudnine_2

I thought so too. I asked them about this a few months ago but they said that I had borrowed over £25K on this particular deal and therefore no go.
Looking at my contract though, it does state the word 'Rental' which seems to infer renting the car rather than 'hire and purchase'. I'm just worried that following a lousy sale at auction, lets say £5K and plus Mercedes costs, that I could end up with no car and a debt to them of £10K !!!
Hey, thanks again for responding.

cloudnine_2

standupguy wrote: »

Unless the op put in 10k deposit the agreement will be unregulated and outside the Consumer Credit Act at the time the advance was made

I put in a miminal deposit four years ago. The amount borrowed was almost 100% of the vehicle's orginal purchase price. I've been paying off at a rate of £500.00 per month so thats over 50% of the amount borrowed. Mercedes say no to the car return though.

saveallmymoney

What sort of scheme is this? Its not PCP or standard HP?

rubydoiwannabee

saveallmymoney wrote: »

What sort of scheme is this? Its not PCP or standard HP?

a very expensive one!!!

Sorry I don't mean to be flippant, but I am just staggered that at £500 per month you still owe such a lot, how long have you been paying for?

then again what do I know.... I drive an 8 year old ford.... so just ignore me.:o

embarrassed_about_my_debt

Sorry to the OP i havent got any answers to help but for Ruby

Original Price £35K

Monthly Payments £500 x 48 = £24K
Baloon Payment = £15k
Total = £39k
Making £4k Finance

Not too out of the way on car finance agreement like that.

cloudnine_2

Just spoke to collections at Mercedes finance and they confirmed that it is still no go with me extending or refinancing the £15 K come January. Its a real cul de sac, as if I sell the car privately ( I'd get more than they will at auction) then, I have to be able to settle the remainding finance owing, and, I haven't the capital to do that. If I hang on to January then they will repossess the car and I may end up owing mor than £10K.

One question though, is how long they will take to get a court order to take the car back from me defaulting in January? If I hand it back voluntarily, they can start proceedings quicker. So, I might be better off not handing it back, as I was going to do. Difficult one this.

standupguy

They do not need a court order to repossess the car as the agreement is unregulated and outside the Act.

Once it goes into arrears they can put out to a repossession agent.

tyllwyd

Do dealers ever get involved in something like this? I'm just wondering if a dealer might be willing to settle the finance for you in return for the car, so at least you'd be no worse off. But that might be a complete no-no, I have no idea!