Returning A Car

stapeley

A question regarding my OH,s car . She has a company car now , but bought a car on finance about 2 1/2 years ago . It was a 5 year deal . It has been on her drive unused for a few months now , all payments are up to date . It needs a MOT service and tax . The question is can she ask them to just take car back as she has paid off half now ? Would save her quite a bit each month , selling private would not clear rest of finance . CHEERS

peb

It depends on whether it is a Hire Purchase transaction or a loan.

If HP the car can be returned if more than 50% (of the total) has been repaid which it appears to have been - so yes. We were taught (consumber law) that this was not ideal as you would lose money but if selling private isn't going to cover the finance it will save money.

stapeley

So no adverse record on her credit file ?

CCCS_Sarah

I believe the credit company may mark a V on your credit file to show that the agreement was voluntary terminated. I’m just trying to find some more info on this for you now though (Can never find anything when you need it)

If you do decide you want to Voluntary terminate you agreement you can use this letter.

Your Name
Your Address

Company's Address

The Date

VOLUNTARY TERMINATION OF AGREEMENT

Dear Sir/Madam
Re: Account Number (Car Make/Model and Registration Number)
I am/we are writing to notify you that I am/we are exercising my/our right to terminate the above Agreement under Section 99 of the Consumer Credit Act 1974.
I/we understand that I shall/we will be liable to you for the amount calculated under the formula in Section 100 of the Consumer Credit Act 1974.
Please send me/us details of how the vehicle can be returned to you.
Please confirm receipt of this request by telephone/fax to me/us on (your telephone number or fax number).
Yours faithfully

Your Name

GeorgeUK

From what i remember, something is put on her credit file for a voluntary termination. Not sure if it will only infuence other HP applications but as it isn't a missed payment or default, can't see why it should be flagged up to other creditors. Might be worth giving experian a call incase they can advise.

CCCS_Sarah

Just found this and if you were to hand the car back it would show as a VT on your credit file.

http://www.callcredit.co.uk/consumer/your-questions-answered/faq-display/SHARE

stapeley

Thanks for replies , but what payment would she be liable to ? She has no adverse credit file and can afford to pay the monthly payments . She just does not need it sitting there , and could save £150 a month .

standupguy

Add up the deposit and all of the payments made to date and compare that figure to the half Hire Purchase figure detailed on the agreement.

If she has paid more there will be nothing more to pay providing she is up to date with the monthly payments and the car is in a reasonable condition.

If there is a shortfall between the two figures then this must be paid at the time of VT also.

The Vt marker on her credit record will warn future HP lenders that she has terminated the agreement and returned the car - whilst officially it should not impact future credit the practicalities are that if she has done this once .... she could do it again... resulting in Finance companies losing money
- so she may well find that any future HP may only be granted with a substantial deposit paid by her to ensure the amount of loan is always less than the value of the car.

stapeley

OH has paid half the total amount . I ,ve looked at agreement ,but nowhere does it say when 50% has been paid the agreement can be terminated. I would assume it would need to be returned in a road worthy condition , that is with a currant M O T cert.

standupguy

It sounds like she has a loan agreement rather than HP and if that is the case then there is no right to terminate and hand the car back.

What does it say at the top of the agreement as regards the type of Finance?