walking away from a lease deal

crazy_chris

Hi can you help? My husband bought a van on a 4 year lease last September. He has had to close his business down so he doesn't need the van. Will cost £9500 to buy the van outright! What happens if he just stops paying the lease payments?:eek:

standupguy

If you can buy the van outright it sounds like lease purchase rather than a lease - there is a difference and you need to check the document to confirm which type of finance.

Also, was the business a limited company or was he a sole trader?

Elsie1966

I have the same sort of problem. I have a non regulated lease purchase agreement which I would like to settle. I have only had the agreement for 3 months and the settlement I have been quoted pushes the balance of the settlement over the original loan value (by £1900). It is a fixed rate agreement for £15K but the settlement quoted is nearly £17K. I have currently made three payments of £386 per month. I have spoken to the finance company concerned and questioned why the interest is so high and the answer received was "thats just the way it is". I want to fight this and reduce the interest charges. Any ideas how I can do this please? Can I do anything with "rule 78" which I know has been abolished but I don't quite get it. Any advise gratefully received.

standupguy

Elsie1966 wrote: »

I have the same sort of problem. I have a non regulated lease purchase agreement which I would like to settle. I have only had the agreement for 3 months and the settlement I have been quoted pushes the balance of the settlement over the original loan value (by £1900). It is a fixed rate agreement for £15K but the settlement quoted is nearly £17K. I have currently made three payments of £386 per month. I have spoken to the finance company concerned and questioned why the interest is so high and the answer received was "thats just the way it is". I want to fight this and reduce the interest charges. Any ideas how I can do this please? Can I do anything with "rule 78" which I know has been abolished but I don't quite get it. Any advise gratefully received.

I am wondering why it is unregulated when the advance was £15k? - is it in the name of a limited company?

Elsie1966

Hi Standupguy, yes it is for a limited company.

crazy_chris

Hi standupguy, yes you are right it is a lease purchase deal and he was a sole trader. Any ideas how to get out of it?

standupguy

crazy_chris wrote: »

Hi standupguy, yes you are right it is a lease purchase deal and he was a sole trader. Any ideas how to get out of it?

Ok, I assume the £9500 is the settlement figure you have from the Finance company?

You could sell the van and settle the Finance - if the van is worth more than the settlement you can pocket the difference, if it is less you will have to make up the shortfall.

Alternatively check the document for the half Hire Purchas price figure. You can then voluntary terminate the agreement and return the van but you will have a liability equal to Half the HP price figure less the deposit paid less all the payments made so far.

If he just stops paying, the van will be repossessed and he will have an outstanding liability and your husbands credit record will be shot.

standupguy

Elsie1966 wrote: »

I have the same sort of problem. I have a non regulated lease purchase agreement which I would like to settle. I have only had the agreement for 3 months and the settlement I have been quoted pushes the balance of the settlement over the original loan value (by £1900). It is a fixed rate agreement for £15K but the settlement quoted is nearly £17K. I have currently made three payments of £386 per month. I have spoken to the finance company concerned and questioned why the interest is so high and the answer received was "thats just the way it is". I want to fight this and reduce the interest charges. Any ideas how I can do this please? Can I do anything with "rule 78" which I know has been abolished but I don't quite get it. Any advise gratefully received.

Unfortunately rules for calculating settlement figures do not apply in this case as it is an unregulated agreement and therefore outside the Consumer Credit Act.

This means that Finance companies do not have to give any rebate of charges at all and could, if they wanted, charge the full balance left owing.

Adding 8 months extra interest is not uncommon on unregulated agreements leaving hirers with much higher settlement figures than they thought they would have.

Your best bet would be to try and speak to someone with some authority and try to negotiate a more sensible figure.

tictax

Can't reallly see the finance company reducing the interest charge but it's worth a try.